In 2008, - sodexo.com · Sodexho Alliance Individual Company Financial Statements 192 Supplemental Information on the Individual Company Financial Statements 210 Employment and environmental

2006-2007

REFERENCE DOCUMENT

RE

is changing the Group’s name and rejuvenating its visual identity.

In 2008,

Sodexo_Couv_Doc_Ref_2007-GB.indd 1 14/01/08 15:18:03

1. Making Every Day a Better Day 3Two activities in the world 4

History 5

The Quality of Life Architect 6Message of Pierre Bellon 7Interview with Michel Landel 9

Experiencing and Sharing Quality of Life 28

2. Corporate Governance 53Corporate Governance 54

The Board of Directors 56

Executive Committee 80

3. Financial Communication 89Investor Relations 90

Sodexho Alliance Shares 94

Capital 97

4. Consolidated Information 101Activity Report Fiscal 2007 102

Sodexho Group Consolidated Financial Statements for the Year Ended August 31, 2007 113

Notes to the Consolidated Financial Statements 118

Employment and Environmental Information 181

5. Information on the issuer 191Sodexho Alliance Individual Company Financial Statements 192

Supplemental Information on the Individual Company Financial Statements 210

Employment and environmental information relating to the issuer 214

6. General Information 217General Information about Sodexho Alliance and its Issued Capital 218

Condensed Group Organizational Chart 225

7. Annual Shareholders’ Meeting 227Board Report 228

Resolutions submitted to the Annual Shareholders’ meeting of January 22, 2008 232

8. Glossary 245

9. Responsibility for the Reference Document and the Audit of the Financial Statements 247Responsibility for the Document de Référence 248

Responsibility for the audit of Financial Statements 248

10. Reconciliation table 249

At the annual shareholders’ meeting held on January 22, 2008, the shareholders approved the change of the Group’s name from Sodexho Alliance to Sodexo and updated the look of the brand.

In order to confi rm to the Reference Document fi led with the AMF on November 16, 2007, this change has not been implemented as part of this document.

Important information

Reference Document2006 – 2007

Management report, consolidated Group fi nancial statements and Statutory Auditors’ reports for the years ended August 31, 2005 and 2006.

The following information is included by reference in the present reference document:

• Group management report, Group consolidated fi nancial statements and Statutory Auditors’ report on the consolidated fi nancial statements for the year ended August 31, 2006 as presented on pages 88-153 of the reference document fi led with the Autorité des marchés fi nanciers (French fi nancial markets authority) on November 24, 2006 under number D.06-1215.

• Group management report, Group consolidated fi nancial statements and Statutory Auditors’ report on the consolidated fi nancial statements for the year ended August 31, 2005 as presented on pages 93 - 144 of the reference document fi led with the Autorité des marchés fi nanciers (French fi nancial markets authority) on December 12, 2005 under number D.05-1370.

The information included in these two reference documents, other than that listed above, if necessary, is replaced and/or updated by the information included in the present reference document.

Copies of this document are available on Sodexho Alliance’s website, www.sodexho.com or on the website of the Autorite des marches financiers, www.amf-france.org.

This Reference Document (registration document) was fi led with the Autorité des marchés fi nanciers on November 16, 2007 under number D.07-986, in accordance with Article 212-13 of its general Regulations. It may be used in support of a market transaction if supplemented by an information notice approved by the AMF.

SODEXHO ALLIANCE 2006 − 2007 R e fe rence Document 3

1. Making Every Day a Better Day

Food and Facilities Management services 4

Service Vouchers and Cards 4

History 5

The Quality of Life Architect 6

Message of Pierre Bellon 7Interview with Michel Landel 9Executive Committee 10Quality of Life services – Sodexho’s strategy 11Financial Highlights Fiscal 2007 16A corporate citizen 18

Experiencing and Sharing Quality of Life 28

Food and Facilities Management services 29Corporate Services 29Leisure 32Defense 34Correctional Services 36Health Care 38Seniors 41Education 44Remote Sites 47

Service Vouchers and Cards 50

Two activities in the world 4

SODEXHO ALLIANCE 2006 − 2007 Reference Document4

1. Making Every Day a Better DayFood and Facilities Management services

Food and Facilities Management services

FOODSERVICESD

No.1 worldwideHealth CareSeniorsEducation

No.2 worldwideCorporate ServicesRemote Sites** Food and Facilities Management services

FACILITIES MANAGEMENT SERVICESD

The development of Facilities Management services

1967 CNES (National center for space

studies), Kourou, French Guyana.

1974 Entry into Remote Sites activity.

1980-90 Global Hospitality Offer in Health Care

in the United States and France.

1990-present Development of Facilities Management

services in Education and Defense.

Today, Facilities Management

services accounts for 18.1% of Group revenue.

Service Vouchers and CardsNo.2 worldwide

Source: Sodexho


Making Every Day a Better Day 1.History

History1966 Sodexho is founded in Marseille by Pierre Bellon, building on his family’s 60-plus years of experience

in catering for luxury liners and cruise ships to offer similar services to businesses, schools and hospitals.

1968 Sodexho begins operations in the Paris area.

1971-1978 International expansion starts with Belgium, Italy and Spain. The Remote Site Management business is launched, initially in Africa and then in the Middle East. A new business – Service Vouchers – is launched in Belgium and Germany.

1983 Initial public offering of Sodexho shares on the Paris Bourse.

1985-1993 Sodexho establishes operations in North and South America, Japan, Russia and South Africa, and reinforces its presence in Continent al Europe.

1995 Alliances with Gardner Merchant in the United Kingdom and Partena in Sweden.

1996 The Service Vouchers and Cards business expands into Brazil with the acquisition of Cardàpio.

1997 Alliance with Universal Ogden Services, the US market leader in remote site management.

The holding company changes its name to Sodexho Alliance.

1998 The merger of the Foodservice operations of Marriott International and Sodexho and the f ormation in the U.S. of Sodexho Marriott Services, 48.4% owned by Sodexho, which becomes North American market and global leader in Food and Facilities Management services.

Acquisition of Luncheon Tickets, the Number 2 in Argentina in Vouchers.

1999 Sodexho becomes no.2 in service vouchers in Brazil with the acquisition of Refeicheque.

2000 Albert George is appointed Chief Operating Offi cer of Sodexho Alliance.

Universal Services becomes the world leader in remote site management.

2001 Sogeres (France) and Wood Dining Services (US) join the Sodexho Group.

Sodexho Marriott Services becomes a 100% subsidiary and changes its name to Sodexho, Inc.

2002 On April 3, Sodexho Alliance is listed for the fi rst time on the New York Stock Exchange.

2003 Jean-Michel Dhenain and Michel Landel are appointed as Chief Operating Offi cers, succeeding Albert George.

2004 The succession plan for Pierre Bellon is put in place. In September, the Board of Directors announces that from September 1, 2005, the roles of Chairman of the Board and Chief Executive Offi cer will be separated.

2005 Michel Landel becomes Chief Executive Offi cer, succeeding Pierre Bellon, who retains his role as Chairman of the Board of Directors.

2006 After 40 years, Michel Landel, Chief Executive Offi cer sets a new challenge for the Group:

“To become the premier global outsourcing expert in Quality of Life services”

2007 Sodexho Alliance reinforces its leadership position in Service Vouchers and Cards by announcing its intent to close several acquisitions. Sodexho Alliance delists from the New York Stock Exchange on July 16, 2007.


1. Making Every Day a Better DayThe Quality of Life Architect

The Quality of Life Architect

To build Quality of Life, Sodexho designs and implements a global services offer planned and adapted to meet the needs of our clients and customers.A leader in our markets, today Sodexho is internationally recognized for high quality services, effi cient organization and commitment to corporate citizenship.Our tools: expertise, innovation, creativity, cohesiveness and motivation of our teams.With operations in 80 countries comprising 80 percent of the world’s population, Sodexho’s 342,000 employees engage their cultural diversity and global expertise to serve the same Sodexho vision:

“To become the premier global outsourcing expert in Quality of Life services.”


Making Every Day a Better Day 1.The Quality of Life Architect

MESSAGE OF PIERRE BELLON

Sodexho’s Chairman and Founder

D

Sodexho’s mission is to improve the Quality of Life of the 40 million people we serve every day.

We seek to make our company and the Sodexho brand the most desirable and attractive in all of our business segments.

At the Annual Shareholders’ Meeting, the Board of Directors is asking the shareholders to approve a change in the company name and a revision to the visual identity in the form of a new logo.

The change in the Group’s name involves eliminating the word “Alliance” and the letter “h”. The name of the Group would therefore be SODEXO.

The elimination of the word “Alliance”From 1995 to 2000, we made three major acquisitions to strengthen our international network: Gardner Merchant in the United Kingdom, Partena in the Scandinavian countries and Marriott Management Services in North America. These three foodservices companies, all of them much older than Sodexho, had demonstrated their success through the skills of their respective employee teams. It was important not to break up these entities but, on the contrary, to help them develop further, to recognize their merits, to welcome them on an equal footing and to avoid at all costs creating opposition between the acquirers and the acquirees – in other words, creating a perception of winners and losers. To be perfectly clear, as I said at the time: “Money will not buy a company’s history, culture, skills and pride nor the motivation of the women and men responsible for its success.”

Gradually, all three companies expressed a desire to adopt the name of Sodexho. To gain their confi dence and to prove that we keep our promises, we added the word “Alliance” to the Sodexho company name.

During Fiscal 2006, we took an employee engagement survey in 35 countries, interviewing 78,000 staff members, including the entire management and a sample of 20% of site employees. More than 80% of these employees declared their attachment and their pride in belonging to the Group and 83% stated they would not hesitate to recommend Sodexho to a friend seeking employment.

It therefore seems to us that the word “Alliance” is no longer necessary.

The elimination of the letter “h”The primary purpose of eliminating the “h” is to facilitate the pronunciation and spelling of our brand in any language throughout the world. Studies we have carried out reveal that in certain languages an “x” followed by an “h” is diffi cult to pronounce.

The idea of eliminating the letter “h” has been discussed from the start of Sodexho. From the beginning, the company name was often mispronounced and misspelled. I therefore suggested eliminating it, but the 5,000 people who made up Sodexho at the time came essentially from the hotel and restaurant industry and considered the “h” an integral part of their identity. In view of their emotional reaction to the idea, I decided not to pursue it. Today, however, the diversity of our current services and those to come, as well as the new competencies of our employees (especially in Facilities Management) have made the elimination of the “h” necessary, and according to our surveys, the idea no longer elicits any particular reaction within the Group.

Rejuvenating our visual identityThe studies also indicate that we need a logo with greater impact, more readable and more modern. We called upon an agency specializing in brand strategy and design to help us.

Here is the result of their work.



When tested on audiences inside and outside the Group, our new company name and our rejuvenated visual identity were very well received. Now they have to be made into a truly global brand.

A single, global brand that is known and appreciated will be a considerable asset in helping us to accelerate the Group’s internal growth and improve its profi tability. It is the most visible cement uniting our clients, customers, employees and shareholders.

In a world of “over-communication”, a strong, single global brand can be immediately identifi ed and recognized. At the same time, any failure in performance, at a site or in a particular region, client segment or country can have repercussions on the whole Group by tarnishing its image.

Thus, a single, global brand requires all our businesses, entities and countries to have the same high standards of quality; it acts as a guarantee for all those who contract Sodexho services. It makes us more responsible and more unifi ed in achieving progress and implementing innovations. Finally, it gives us an advantage in worldwide competition, boosting the effectiveness and productivity of our communications investments.

Many people, especially our employees, would be proud to have our brand become very well known.

As we prepare to accomplish this, we need to recognize that we have some weak points as well as strong points.

Our main weak point is obvious. Some high-margin products and services can incorporate significant advertising expenditures into their price. We cannot do that. Thus, it is going to take a wealth of imagination to make Sodexo known without costing us too much.

On the other hand, we have many strong points. We started out from nothing and today:

we are one of the largest employers in the world;

we have received numerous awards and now rank 4th in the Top 100 best outsourcing companies worldwide;

we have been recognized for our corporate citizenship by the DJSI (Dow Jones Sustainable Indices) Europe and World, which named us “supersector worldwide leader” in our business sector;

we are the global leader in most of our markets;

we are independent, because my family is the majority shareholder;

we have prestigious clients; we operate in famous places such as the Eiffel Tower, the Lido in Paris, Longchamp, Roland Garros, Ascot and Blenheim Palace in the United Kingdom…

We have set our sights on making Sodexo the most desired brand in its category. We cannot reach this goal unless each of our managers and employees is convinced that a strong, single global brand will accelerate our internal growth, improve our margins and allow us to keep our best talents and attract new ones.

Pierre Bellon

••

•

••

•

Our clients and our teams are scattered all over the world.

We were dreaming about a star that brought us all together, visible from deserts and glacial areas,

from Tierra del Fuego to the Bering Strait, from the equatorial savannas to the Central Asian steppes.

The scientists we consulted told us there was no star that could be seen from all four corners of the earth. So we invented our own star.

The Sodexo star is universal, visible at our sites and on our uniforms, close to each one of us, lighting our way and guiding us.

It radiates with thousands of smiles like a bridge between you and me, between us and the world.

To light up gray mornings. To make a child’s eyes shine. To squeeze the hand resting on the covers. To comfort those who live far from home.

To bring a little bit of everyday joy to everyone…

The Sodexo Star will be our promise “Making every day a better day”



INTERVIEW WITH MICHEL LANDEL

Chief Executive Offi cer, Sodexho

D

November 15, 2007

It has been two years since you were appointed CEO. What is your assessment of the great challenges facing the Group?Several major trends have marked the start of the new century. While the population in the Western world is declining and aging, emerging market countries are catching up with the standard of living in developed countries and their increasingly urbanized populations are adopting Western modes of consumption. There is growing concern about the resulting impact on the world’s environment. The fi ght against global warming and, more broadly, the need to demonstrate corporate citizenship are becoming priorities everywhere. The need to secure energy resources is back on the world agenda. “New” technologies are now an integral part of business as well as daily life. Finally, innovation and economic power are starting to shift toward the East. All these global challenges offer Sodexho, in reality, considerable opportunities for growth as well as an increased responsibility as one of the world’s largest corporate citizens.

Is Sodexho prepared to seize these opportunities?From the very beginning, Sodexho’s development as a company has been closely linked to societal changes. Our Group has succeeded in consistently anticipating the needs of our clients and customers. With its mission to improve the Quality of Daily Life – a profound aspiration – Sodexho has become the global leader in Foodservices in Education, Health Care and Seniors. For years, we have been committed to supporting our clients’ development by contributing to the sustainable development of local economies. We continue to invest in employee training and improved quality standards, particularly in countries with emerging markets. With Service Vouchers and Cards, we offer companies and public authorities innovative solutions to manage their programs more effi ciently. All these examples demonstrate our ability to anticipate major changes in society with a key asset: our 342,000 employees who represent the diversity of our clients and customers throughout the world.

What is Sodexho’s ambition in coming years?In order “to become the premier global outsourcing expert in Quality of Life services”, Ambition 2015 was launched two years ago. We aim to double our revenue in ten years, with an average annual organic growth rate of seven percent. We have clearly defi ned a strategy to achieve this goal: reinforce our leadership in Foodservices, accelerate our development in Facilities Management services and become the global leader in Service Vouchers and Cards.

How do you plan to achieve this ambition?First, our fi nancial performance for Fiscal 2007 was good.

Organic growth reached 8.4% in Fiscal 2007 representing an improvement of 4% in two years. All segments of Food and Facilities Management services and Service Vouchers and Cards activities contributed to this performance.

As a result of the initiatives to improve site productivity in all activities and geographies, and the confi rmed turn-around of Sodexho in the UK, operating profi t increased by almost 15%, at constant exchange rates.

Net cash provided by operating activities reached a new high.

Next, we plan to continue mobilizing our teams around six strategic imperatives: accelerate profi table organic growth; improve our operating profits, margins and cashfl ow; ensure compliance through reinforced standards, business rigor and best practices; live our values; create a competitive advantage through our people and their diversity, and make Sodexho’s brand the benchmark for Quality of Life services. A series of initiatives are gradually being introduced in all these areas.

Thus, we recently decided to change our corporate name and the Group’s single global brand. “Sodexho Alliance” will become “Sodexo” and our logo will be updated.

Why did you change the Sodexho brand?Simply, our corporate name will be changed to refl ect our Group strategy more accurately. I am convinced we can use it more effectively as a strategic tool. That is why I am determined to make Sodexho a premier brand worldwide to leverage profi table organic growth for the Group.

Our brand is a commitment to quality for our clients, customers, employees and shareholders. It is also the force that unifi es us as a global community.

By modernizing the brand and increasing its impact, we are seeking to enhance its value –for the benefi t of all of us.

•

•

•



EXECUTIVE COMMITTEE

As of September 1, 2007

D

Sodexho’s Executive Committee, under the leadership of Michel Landel, sets a common vision, defi nes strategy, and oversees the implementation and monitoring of the operating entities’ performance. The Committee defi nes the structures necessary for the company’s development and ensures that each senior manager has a clearly designated successor. The members of the Executive Committee also are «ambassadors» of the Sodexho brand and are responsible for promoting it worldwide.

The Executive Committee relies on an Operating Committee comprising the main activity, business unit and country managers. This Committee transforms strategic decisions into action plans and mobilizes the teams necessary for deployment. Each member also has a mission to share information, transfer best practices and strengthen adherence to the Group’s values.

Michel LandelChief Executive Offi cer, Sodexho AlliancePresident, Executive CommitteePresident, Sodexho STOP Hunger Association

Élisabeth CarpentierGroup Senior Vice President and Chief Human Resources Offi cer

George ChavelGroup Chief Operating Offi cerChief Executive Offi cer, North America, Food and Facilities Management services

Roberto CirilloGroup Senior Vice President, Strategic Planning and Innovation

Pierre HenryGroup Chief Operating Offi cerChief Executive Officer, Service Vouchers and Cards, and South America, Food and Facilities Management services

Siân Herbert-JonesGroup Chief Financial Offi cer

Philip JansenGroup Chief Operating Offi cerChief Executive Officer Europe, Food and Facilities Management services

Nicolas JapyGroup Chief Operating Offi cerChief Executive Officer, Remote Sites, and Asia/Australia, Food and Facilities Management services

Clodine PinceminGroup Senior Vice President, Communications and Sustainable Development

Damien VerdierGroup Senior Vice President, Marketing



QUALITY OF LIFE SERVICES – SODEXHO’S STRATEGYD

Sodexho launched “Ambition 2015” two years ago to become the global expert in Quality of Life services. By the year 2015, the Group aims to double its revenue and achieve a well-balanced portfolio of business segments serving 100 million customers compared with 40 million today.

Ambition 2015 is mobilizing all Group employees around a clear-cut strategy to reinforce Sodexho’s leadership in Foodservices, accelerate its development in Facilities Management services and become the global leader in Service Vouchers and Cards.

The Sodexho offer

Considerable growth potential

Three strategic objectives

Sodexho in China

Sodexho in India

D

D

D

D

D

Sodexho’s offer

Signifi cant growth potential

Food and Facilities Management services Service Vouchers and Cards FOODSERVICES SOFT SERVICES TECHNICAL MAINTENANCE

(HARD SERVICES)

Staff restaurantCateringExecutive DiningVending Meal Delivery…

Reception, Help DeskGeneral servicesCleaningLaundryGroundskeepingWaste management…

PlumbingHVACEnergy managementMaintenance and repairProject Management…

Meal PassMobility PassGift PassLeisure PassBook CardTraining Voucher


Over 650 billion euro

Service Vouchers and Cards


Estimated total market

Sodexho estimate

Over250 billion euro

Foodservices


Soft services


Technical maintenance



Three strategic objectives

Reinforce Sodexho’s leadership in Foodservices

With 40 years of experience and recognized expertise in every area of its original Foodservices business, including gastronomy, well-balanced nutrition, food safety, socially responsible procurement and environmental protection, Sodexho possesses all the strengths required in a market in which only 45 percent of services are outsourced today.

The year’s sales successes

Corporate Services United States: Wellpoint, Inc. chose Sodexho to provide Foodservices for 30,000 customers at 67 sites and SodexhoMagic won the employee Foodservices contract at Disneyland in Anaheim, California.

LeisureFrance: Sodexho ensures Foodservices at the Eiffel Tower, featuring an original culinary and commercial approach developed in partnership with the Alain Ducasse group.

United States: Sodexho inaugurated “Café St. Barts” on Park Avenue in New York, one of the most celebrated addresses in the world.

Defense Sweden: the Armed Forces selected Sodexho to provide Foodservices at its fi ve training camps in the Norbotten region.

Health Care United Kingdom: Nuffield has selected Sodexho to handle Foodservices for patients, visitors and staff at its 39 hospitals. The contract makes Sodexho the national leader in the private hospital market.

Education Chile: Santo Tomas de Santiago University awarded Sodexho the contract to deliver Foodservices to its 12,000 students at 6 sites.

Singapore: Sodexho won the Foodservices contract at the American School (3,800 students).

2006-2007 AwardsUnited StatesThe “Best Concept” prize was awarded by Food Management Magazine for “Sweet Shots”, conveniently packaged treats allowing customers to enjoy small portions of desserts in the workplace without worrying about calories.

•

•

•

•

•

•

•

Accelerate Sodexho’s development in Facilities Management services

At the core of Sodexho’s strategy, the growth potential of Facilities Management services is one and a half times that of Foodservices.

From the start, the Group has offered a wide spectrum of services through a structure organized around client segments. This pioneering position, bolstered by the credibility earned with Foodservices clients, has enabled Sodexho to demonstrate its expertise and generate 18.1 percent of its consolidated revenues in Facilities Management services in Fiscal 2007.

Today, the Sodexho offer ranges from self-service Foodservices to maintenance of medical scanners and MRIs, waste treatment, construction and air conditioning engineering. These offers create sustainable value for clients, making their businesses more effi cient while at the same time improving the Quality of Daily Life for customers. The acknowledged expertise and certifi ed quality of these offers is helping Sodexho to reinforce its leadership position throughout the world.

This year’s sales successes

Corporate Services Australia: Westpac outsourced its Facilities Management services to Sodexho at more than 1,600 sites across the country.

Netherlands: Sodexho won the invitation to tender launched by KLM for Food and Facilities Management services at its 90 buildings in the Schiphol region (38,000 customers).

Spain: Sodexho has succeeded in developing its Facilities Management services. Chosen in 2005 to provide technical maintenance services for major clients such as Coca-Cola and the Barcelona Football Club, Sodexho doubled its revenue in Facilities Management services in 2006.

Defense Cyprus: The British Ministry of Defence awarded its Food and Facilities Management services at the Sovereign Base of Cyprus to Sodexho.

Health Care Canada: York Central Hospital of Toronto outsourced its Food and Facilities Management services to Sodexho. The number of outsourced services makes this the largest contract of its type ever implemented at a Canadian hospital.

United States: Moses Cone Medical Center (Greensboro, North Carolina) selected Clinical

•

•

•

•

•

•



Technology Management, a specialized service of Sodexho, to ensure the maintenance of 13,000 high-tech diagnostic equipment components.

Education Singapore: École Française (French School), an international school with a student body of 1,000, added technical maintenance to Foodservices and housekeeping already provided by Sodexho.

United States:

Sodexho won the Facilities Management contract for the State University of New York at Buffalo which has a student population of 27,000;

the Recovery School District, which has 8,500 students in New Orleans, Louisiana, subcontracted its Food and Facilities Management services to Sodexho.

2006-2007 AwardsInternational

The International Association of Outsourcing Professionals (IAOP) ranked Sodexho 4th among the world’s top performing service companies and 1st in its “Facility Services” category. Companies are rated on 18 criteria, including revenue, number of employees, employee skills and training, professional and technical certifications such as ISO 9001 and the quality of management and service to clients.

Brazil: Sodexho won the “Prêmio Top Hospitalar” and “Top of the Mind” prizes.

United Kingdom:

two prizes were awarded to Sodexho at the Eventia Corporate Event for Knebworth House: “Best Event Organizer” and “Best Use of Facilities” at outstanding venues;

the CPIS (Chartered Institute of Purchasing and Supply) awarded the Salvation Army its “Best Initiative” prize, as a result of its collaboration with Sodexho.

United States: Sodexho was named “Outstanding Business Partner of the Year” by the National Association of College Auxiliary Services (NACAS).

•

•

•

••

•

Become the global leader in Service Vouchers and Cards

Over the last 30 years, Sodexho has become No.2 worldwide in Service Vouchers and Cards. Sodexho offers companies and public authorities innovative, fl exible, secure solutions to effi ciently manage their social policies. In a constantly changing market, Sodexho relies on three key assets: its innovative capabilities, responsiveness and optimized synergies with other Group entities. In Fiscal 2007, Sodexho achieved numerous sales successes that have strengthened its positions.

This year’s sales successes Brazil: 4,900 civil servants received Food Passes allocated by the Secretary of State for Education in Minas Gerais.

France: the City of Marseilles awarded Sodexho the management of Restaurant Vouchers for its 9,500 municipal employees at 250 sites.

Spain: Sodexho won an Assistance contract with the Fondación Caixa, the world’s eighth largest private foundation, for its program to fi ght poverty among children under 16 years of age. The four year contract will concern 100,000 families.

Venezuela: 1,700 employees of Venevision now use a Sodexho Food Pass.

2006-2007 AwardsFrance: Sodexho received the “Public-Private Action Award” for its service to distribute Culture Vouchers to students in the Centre region.

Luxembourg: The national convention of Human Resources Managers awarded Sodexho the prize for the “Best incentive and motivation solutions in 2006”.

United Kingdom: Sodexho was named “Childcare Voucher Provider of the Year” by the magazine Employee Rewards and Benefits.

•

•

•

•



1.3 billion inhabitants, 450 million of whom live in urban areas.

80 million are considered “middle class,” a number which will grow to 700 million by 2020.

Average annual GNP growth over the last 20 years: 10%

Estimated at 8% for the next 10 years

Growth is balanced, qualitative and respectful towards the environment

Sodexho in China

The most populous country on earth, which is now experiencing the world’s most rapid economic growth, has naturally attracted the Group’s attention. In 1995, Sodexho won its fi rst Foodservices and cleaning contract with the American International School in Shanghai. From 1995 to 2001, Sodexho focused on developing the segments serving foreign companies and international schools and widened its range of services. In 2002, Sodexho signed its fi rst Foodservices contract with a Chinese company, Haier (Qingdao), followed by its fi rst public contracts, to become the uncontested leader in the Chinese market.

At the same time, the Group has been expanding its Service Vouchers and Cards business. In May 1999, it obtained the fi rst license delivered by the city of Shanghai to manage fringe benefi ts using a Meal Pass. In 2001, it launched the universal Meal Pass for holiday periods (Moon Festival and Chinese New Year), in 2003, the Loyalty Pass for shopkeepers and in 2006, the Leisure Pass for companies looking for ways to motivate their employees.

Sodexho is also the fi rst foreign-based company to be awarded the “2007 Food Service Excellence” prize for its commitment to promoting employment and the sustainable development of the local economy.

The Chinese market

Sodexho in China Food and Facilities Management services

Average growth rate over the last 5 years: 26%.

13,000 employees in 24 cities, that represent 25%-30% of China’s urban population (Beijing, Dalian, Dongguan, Foshan, Guangzhou, Hangzhou, Huizhou, Jiangmen, Jiaxing, Nanjing, Qingdao, Qingyuan, Shanghai, Shenyang, Shenzhen, Suzhou, Tangshan, Tianjin, Wuhan, Wuxi, Xiamen, Yangzhou, Zhongshan, Zhuhai).

500 sites, including 88 new contracts in Fiscal 2007.

Among our new clientsThe Independent Schools Foundation of Hong Kong has outsourced all its Food and Facilities Management services to Sodexho and UBS its soft services at nine sites (Beijing, Shanghai, Guangzhou, Shenzhen).

••

•

Tianjin Faw Xiali Automotive and Tianjin Faw Toyota Motor in Tianjin, GE China Technology Center, the headquarters of Unilever China and Henkel China in Shanghai have entrusted their Foodservices to Sodexho.

Sodexho in China Service Vouchers and Cards (Shanghai)

Average growth rate in the last 5 years: 18% (Sodexho estimate).

12,204 clients.

1,000,000 benefi ciaries.

3,500 affi liated companies.

Among our new clientsChina Netcom and Shanghai Mobile Communications have adopted the Sodexho Meal Pass.

•

•••

Source: Sodexho



1.1 billion inhabitants and 1.3 billion in 2020.

An average age of 24.8 years.

A dynamic middle class of 300 million people.

10th biggest economy in the world.

Sustained economic growth in industry and services.

Global leader in information technologies.

Sodexho in India

In 1997, Sodexho began operations in India, a country offering considerable potential, given the size of the population and a legislative environment favorable to the development of the Service Vouchers and Cards business. The fi rst Indian clients received Restaurant vouchers, followed by Gift vouchers in 1999. To meet the needs of India’s rapidly developing major groups, particularly in information and communication technologies, Sodexho relied on synergies within its operations and development teams across global regions to win the company’s fi rst Facilities Management services contracts in 2001. In 2002, Sodexho supported its large international clients who were starting up operations in India and obtained its fi rst Foodservices contracts. Today, Sodexho is, in turn, supporting the international expansion of its major Indian clients.

As the leader in India’s Service Vouchers and Cards and Facilities Management markets, Sodexho’s success is due to its sizable investments in employee training and service quality, respect for local cultures, synergies among the Group’s activities and the strength of a recognized brand.

The Indian market

Sodexho in India Food and Facilities Management services

Average growth rate in the last 5 years: 102%

9,000 employees in 26 cities (Ahmedabad, Bangalore, Baroda, Bellary, Chandigarh, Chennai, Coimbatore, Delhi, Faridabad, Gurgaon, Hyderabad, Indore, Kolkata, Lucknow, Madurai, Mumbai, Mysore, Nagpur, Noida, Patna, Pondicherry, Pune, Rudrapur, Secunderabad, Surat, Vizag).

311 sites, including 67 new contracts in Fiscal 2007.

117 clients.

Among our new clientsSodexho opened the Education segment with an initial Foodservices contract for the American School in Mumbai, including renovation of the cafeteria and the kitchens. It also opened the Health Care segment with a contract in Foodservices, maintenance and help desk at Columbia Asia Hospital in Bangalore and technical maintenance services of facilities at Fortis Hiranandani Health Care in Mumbai. In the Corporate Services segment, Cisco in Bangalore has outsourced its Foodservices to Sodexho, Siemens the

••

••

technical maintenance of 182,394 square feet in Mumbai and IBM Daksh 1.3 million square feet on 12 sites.

Sodexho in India Service Vouchers and Cards

Average growth rate in the last 5 years: 59%.

11 cities (Ahmedabad, Bangalore, Chennai, Coimbatore, Chandigarh, Ernakulam, Hyderabad, Kolkata, Mumbai, New Delhi, Pune).

5,173 clients.

600,000 beneficiaries of Restaurant Vouchers and Cards Restaurant.

16,000 affiliates.

Among our 1,800 new clientsThe software development company Oracle chose Sodexho’s “Smart Card”, the No.1 turnkey solution in the Indian market, for Foodservices delivery to its 12,000 employees at its 21 sites.

37,400 employees of Bhilai Steel Plant in Kolkata will receive the Sodexho Gift Pass.

••

••

•

Source: Sodexho



CONSOLIDATED REVENUES

EUR millions USD millions*

2002-2003 11,687 12,490

2003-2004 11,494 13,855

2004-2005 11,693 14,880

2005-2006 12,798 15,676

2006-2007 13,385 17,694

* Calculated at the average exchange rate for each year; for Fiscal 2007 1 euro = 1.3219 dollars.

Organic growth was 8.4% for the year, which represents an improvement of 4% in two years. All Food and Facilities Management services segments as well as the Service Vouchers and Cards activity contributed to this performance.

REVENUES BY REGION

North America 41%

Continental Europe 34%

United Kingdom and Ireland 11%

Rest of the world 14%

Growth in Latin America, Australia, Asia, and especially in China and India, as well as in Remote Sites, contributed to an organic growth in Fiscal 2007 of more than 15% in the Rest of the World.

REVENUES BY ACTIVITY

Food and Facilities Management services 97%

Corporate Services 37%

Defense 3%

Correctional Services 2%

Health Care 19%

Seniors 6%

Education 23%

Remote Sites 7%

Service Vouchers and Cards 3%

Organic growth in Corporate Services reached the high level of 8.1% for Fiscal 2007, notably as a result of the strong recovery and efforts made by Sodexho teams in North America, as well as the dynamism of the Group’s international network.

In Health Care and Seniors, organic growth totaled 9%, demonstrating Sodexho’s solid leadership in this high-potential market. The Group’s full-service offering is well-suited to this segment, both in Foodservices as well as in Facilities Management.

Organic growth in Education also accelerated, reaching 7%, a nice progression from the levels achieved in the two prior years.

NUMBER OF EMPLOYEES

2002-2003 308,385

2003-2004 312,975

2004-2005 324,446

2005-2006 332,096

2006-2007 342,380

NUMBER OF OPERATING SITES

2002-2003 23,873

2003-2004 24,866

2004-2005 26,634

2005-2006 28,234

2006-2007 28,896

EMPLOYEES BY REGION

North America 35% 119,242 employees

Continental Europe 27% 90,705 employees

United Kingdom and Ireland 12% 42,972 employees

Rest of the world 26% 89,461 employees

FINANCIAL HIGHLIGHTS FISCAL 2007D

13.4 billion euro in revenues

342,000 employees at 29,000 sites present in 80 host countries



EMPLOYEES BY ACTIVITY

Food and Facilities Management services 99%

Corporate Services 40%

Defense 4%

Correctional Services 1%

Health Care 15%

Seniors 4%

Education 25%

Remote sites 8%

Shared Structures 2%

Service Vouchers and Cards 1%

OPERATING PROFIT


2004-2005 450 573

2005-2006 605 741

2006-2007 640 846


Primarily as a result of the turnaround in the United Kingdom and better management control in the Rest of the World, operating income increased at constant exchange rate, by 14.5% (excluding the impact of the gain on the sale of the Spirit Cruises subsidiary and the release of the U.S. litigation provision, both of which affected the comparable prior year amount).

GROUP NET INCOME


2004-2005 212 270

2005-2006 323 395

2006-2007 347 459


Group net income increased by 7.5% or by 11% excluding exchange rate effects. This increase primarily resulted from the following: strong growth in operating income, a decrease in financial expense related to continued reductions in debt levels during the year, and to good management of the effective tax rate, which was less than 35%.

DIVIDENDS PAID


2004-2005 119 145

2005-2006 151 194

2006-2007** 183 250

* Calculated at the closing exchange rate for each year; for Fiscal 2007 1 euro = 1,3684 dollars.

** Subject to approval by the Annual Meeting of the Shareholders on January 22, 2008.

In view of the positive results and the level of free cashfl ow generated during Fiscal 2007, the dividend submitted to shareholders’ approval will be 1.15 euro per share, 21% above the dividend paid in the previous fi scal year.

NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES


2004-2005 677 862

2005-2006 488 598

2006-2007 753 995

* Calculated at the average exchange rate for each year; for Fiscal 2007 1 euro = 1.3219 dollar.

For Fiscal 2007, net cash fl ows provided by operating activities are up 54% compared to the prior year, illustrating the quality of the Group’s fi nancial model.

NET DEBT AS A PERCENTAGE OF SHAREHOLDERS’ EQUITY*

(Including minority interests)

2004-2005 33%

2005-2006 21%

2006-2007 5%

* Debt net of cash and financial assets related to Service Vouchers and Cards activity less over-drafts.

EARNINGS PER SHARE

(in euro)

2004-2005 1.36

2005-2006 2.07

2007-2008 2.22

In the absence of the creation of any new shares, earnings per share increased in line with Group net income.



A CORPORATE CITIZEND

Living our values

Our philosophy

Our core values

Our ethical principles

Our ambition

Improving Quality of Life now and for future generations

An integral part of our strategy

The will to progress

Recognized corporate citizenship

Our objectives and our successes

Progressing with our clients

Offering balance and health to our customers

Maximizing the value of our employees’ talent and diversity

Fighting malnutrition through STOP Hunger

D

D

D

D

D

D

D

D

D

D

D

The Group’s 342,000 employees share common values and a commitment to a socially responsible world that must prepare for future generations. These values are conveyed by the individual daily actions of each of our employees, as well as by the Group’s policies and programs to Improve the Quality of Life.

Sodexho’s business, social and environmental commitments are expressed in its Ethical Principles and Sustainable Development Contract. These commitments are recognized and rewarded throughout the world where the Group continually strives to make every day a better day.



Living our values

Our philosophy is the foundation of our success, both in the past and in the future. It is based on six pillars:

who we are;

our business strategy: organic growth;

our mission;

our vision;

our core values;

our ethical principles.

Who we areOur company is the community of our clients, customers, employees and shareholders. Our purpose is to exceed their expectations.

Our business strategy: organic growthWe continue to focus on achieving organic growth in revenues and earnings, while contributing to the economic development of countries in which we operate.

Our missionTo Improve the Quality of Daily Life.

Our visionTo become the premier global outsourcing expert in Quality of Life services.

Our core values

Service spirit Clients and customers are the center of everything we do.

In order to serve them well, on a daily basis, at all levels, we have to demonstrate our ability to listen, our capacity to anticipate their expectations, our sense of conviviality, our responsiveness to their needs and our pride in satisfying them.

Sodexho has become a large, worldwide company, but we still remain a local company in which each manager in the fi eld is a true entrepreneur, close to their clients and empowered in their decision-making.

Team spirit It is an imperative in all of our operations, our business units and support functions, as well as in our management committees.

Each person’s skills combine with other team members’ knowledge to help ensure Sodexho’s success. Teamwork depends on the following: listening, transparency, respect for others, diversity, solidarity in implementing major decisions, respect for rules, and mutual support, particularly in diffi cult times.

••••••

•

•

•

•

•

Spirit of progressWe demonstrate the spirit of progress through:

our will, but also the fi rm belief that one can always improve on the present situation;

acceptance of the evaluation of our performance, which compares us to our colleagues in the company, or with competitors;

rejection of preconceived notions and false alibis for avoiding change;

self-evaluation, because understanding one’s successes as well as one’s failures is fundamental to continuous improvement;

a balance between ambition and humility;

optimism, the belief that for every problem there is a solution, an innovation, or an improvement to be made.

Our ethical principles

LoyaltyA foundation of trust between Sodexho and its clients, employees, and shareholders, based on loyal relations. Trust is one of the cornerstones of operations in our organization.

Respect for peopleHumanity is at the heart of our business.

Sodexho is committed to providing equal opportunities regardless of race, origin, age, gender, beliefs, religion, or lifestyle choices.

“Improving Quality of Life” means treating each person with respect, dignity and consideration.

TransparencyThis is one of Sodexho’s major principles, and is a constant with all stakeholders: clients and customers, employees and shareholders.

Business integrityWe do not tolerate any practice that is not born of honesty, integrity and fairness, anywhere in the world where we do business.

We clearly communicate our position on this issue to our clients, suppliers, and employees, and expect them to share our rejection of corrupt and unfair practices.

In November 2006 , the Group Executive Committee recommended to the Board of Directors the adoption of a “Business Integrity Code”. The code enshrines Sodexho’s core beliefs and practices in the area of business ethics, so that every employee understands and shares the Group’s commitment to business integrity .

All of our employees at every level are expected to adhere to our philosophy and the six progress pillars above guide each of us in our daily work.

•

•

•

•

••



Sodexho’s Ambition for 2015We aim to double our fi scal 2005 revenue and triple our operating profi t.

To achieve this objective, we have a clear-cut strategy:

reinforce our leadership position in Foodservices;

accelerate our development in Facilities Management services;

become the global leader in Service Vouchers and Cards.

Improving Quality of Life for everyone now and for future generations

An integral part of our strategyPresent in 80 countries covering 80 percent of the world’s population, Sodexho’s 342,000 employees, who represent more than 130 nationalities, put their collective cultural diversity and expertise to accomplish a shared vision, to: “Become the premier global outsourcing expert in Quality of Life services.” “Improving the Quality of Daily Life” expresses not only Sodexho’s desire to make life better for everyone we serve today, but also our commitment to ensuring a better future for generations to come.

As a socially responsible company, Sodexho makes social and environmental criteria an integral part of our policies and programs. The Ethical Principles and Sustainable Development Contract, which formulates our commitments and sustainable development strategy, was signed by our senior management team in 2003. In keeping with an improvement-oriented approach, our actions in the fi eld are adapted to the specifi c cultural, economic and environmental features of the countries in which we operate.

The will to progressSodexho forms a community of progress with its clients, customers, employees, suppliers, shareholders and host countries. Our ambition is to structure a progress-driven approach and measure achievements to make every day a better day. The action plan has three objectives:

build a network of coordinators throughout the Group;

develop our commitments and indicators; and

introduce common tools.

In 2006, Sodexho implemented a management tool to exchange and share the best sustainable development initiatives and since then has published a Sustainable Development Report available at www.sodexho.com.

••

•

•

••

The Group’s commitments

Global Sullivan PrinciplesSince 2002, Sodexho has been a signatory of the Global Sullivan Principles, a framework for companies of all sizes and segments that share the same vision of law and justice. We are committed to implementing those principles and accepting our social responsibilities in all countries where the Group operates.

For more information: www.thesullivanfoundation.org/gsp.

The United Nations Global CompactIn 2003, Sodexho joined the Global Compact, making a commitment to respect its ten principles and recognizing a responsibility for human rights, compliance with labor and environmental standards and non-tolerance of corruption.

For more information: www.unglobalcompact.org.

Recognized corporate citizenshipSodexho Alliance is included in four Social Responsibility Investment indices:

FTSE4Good: Sodexho Alliance has been one of four France-based companies included in this index since its creation in 2001 (www.ftse4good.com). The 2007 ranking shows the Group as a benchmark in its business sector.

ASPI Eurozone: Sodexho Alliance was included in this index in 2004 on the basis of sustainable development criteria defi ned by the Vigeo rating system. The Vigeo survey shows that the Sodexho approach covers all aspects of corporate citizenship, with two particularly strong points: its business behavior and community involvement (www.vigeo.fr).

Sodexho was again selected in 2007-2008 for inclusion in the Dow Jones Sustainability World Index and Dow Jones STOXX Sustainability Index (Europe area). For the third year in a row, Sodexho was also named “worldwide supersector leader” in the Travel and Leisure category. Sodexho is the only company headquartered in France to receive this recognition. According to the SAM Group, the DJSI rating agency, “Sodexho’s performance has been remarkable, testifying to a clear business philosophy and great transparency.”

•

•

•



Our sustainable development strategy is set forth in our ethical charter, presenting our objectives and commitments we have made to our stakeholders.

ClientsOBJECTIVE COMMITMENTCreate strong, long-term partnerships Create value for clients over the long term, thereby forging strong

partnerships •

Customers OBJECTIVE COMMITMENTSImprove the Quality of Daily Life, safely Develop a portfolio of services that help to improve the Quality of

Life for everyone who has entrusted us with their well being Reduce food safety risks Inform future generations about the importance of eating correctly and educate them regarding good practices

•

••

Employees OBJECTIVE COMMITMENTSEncourage a fulfilling professional life Provide employees with a powerful “social elevator”

Promote and respect diversity ••

Suppliers OBJECTIVE COMMITMENTSBuild balanced, long-term relationships Pursue procurement policies that guarantee the quality of products

Strongly encourage suppliers and subcontractors to respect our sustainable development values

••

Shareholders OBJECTIVE COMMITMENTEnsure that all shareholders receive the same information at the same time

Regularly provide all shareholders with the same simultaneous, accurate, clear, transparent information

•

Host countries OBJECTIVE COMMITMENTSContribute to the economic and social development of the countries in which we operate

Support the development of local economies by promoting local hiring, the purchase of local products and, in the most disadvantaged countries, local initiatives to stimulate economic growth Fight hunger and malnutrition by expanding the STOP Hunger program Help protect the environment in our host countries

•

•

•



Our objectives, our successes

ClientsProgressing with our clients

Ensuring customer loyalty is the key to Sodexho’s continuing growth. This means forging solid, lasting partnerships through open communication and consistent performance, enabling us to progress together, day after day. Our loyalty strategy is based on the diversity of talent and cultures that make up our teams, our common Clients For Life® approach, and our numerous sustainable development initiatives.

United States

Expanded partnership with Stanford University Medical Center (California)“We are excited to partner with an acknowledged industry leader like Sodexho to enhance the overall patient experience at the hospital. We are confi dent that the new programs, technological innovations and operations Sodexho is providing will help the hospital to run more effi ciently and cost effectively, while at the same time, improving all aspects of the patient’s stay.”

Paul Watkins, Administrative Director, Support Services, Stanford University Hospital & Clinics.

For more than 25 years, Sodexho has provided foodservice to the Stanford University Medical Center, a contract that was extended to environmental services and later to patient transportation. Through innovative transportation solutions, a greater than 300% increase of productivity in on-time delivery (within 15 minutes) was achieved and productivity of existing staff increased by 17%.

In March 2007, Sodexho was awarded a new multi-million-dollar engineering contract for Stanford Hospital & Clinics, Stanford University School of Medicine and the Lucile Packard Children’s Hospital in Palo Alto, California. Under the new contract, Sodexho will manage the plant operations and maintenance and infrastructure renovation projects for the three facilities totaling over 4.5 million square feet in size – the largest physical space managed by Sodexho in the United States.

“GreenBacks” – SwedenProtecting the environment through waste recycling

“GreenBacks” is a system solution for by-product handling fi rst tested in Sodexho offi ces. Ten GreenBacks contracts have been signed in partnership with Ragn-Sells, the Swedish leader in salvage, recycling and waste recovery. By enabling our clients to achieve their environmental goals, this solution helps sustain their loyalty.

For example, The Swedish Teachers Union headquarters in Stockholm, where Sodexho has been delivering food and conference services since 1984, has used “GreenBacks” since 2001. ESAB in Gothenburg, where Sodexho has been providing food, maintenance and concierge services since 1986, introduced the new system in 2003.

IndicatorRetention rate

06-07: 93.9%

05-06: 93.8%

04-05: 93.3%

03-04: 92.9%

02-03: 92.8%

Objective for Fiscal 2008: 95%



2006-2007 AwardsSodexho’s Health, Safety and Environment practices have been recognized in Australia by ExxonMobil, in Chile by the Chilean Security Association, Antofagasta Minerals and Mining Company Anglo American, in New Caledonia by Goro Nickel, in Peru by Techint, on Sakhalin Island (Russia) and in the United Kingdom by RoSPA (Royal Society for The Prevention of Accidents) and the British Safety Council.

ArgentinaSodexho was named “Voucher Issuer of the Year” by the business magazine Revista Mercado.

ChinaSodexho won the prize for “Corporate Foodservice Excellence in China” awarded by the Chinese Cuisine Association (CCA). Sodexho is the only foreign-based foodservice company to receive recognition for its operating practices, its results and its commitment to job promotion and sustainable development of the local economy.

MexicoSodexho is the only Food and Facilities Management company in Mexico to receive the prestigious Empresa Socialmente Responsable (socially responsible company) certifi cation for the third year by the Mexican Philanthropy Center for its business ethics, community involvement and environmental protection in business strategy.

PeruSodexho was named “Company of the Year 2006” in the “Services” category for the third consecutive year by an association created to promote entrepreneurial spirit and service quality.

United KingdomSodexho moved into the “Silver Performance band” in its second year of offi cial recognition as one of the Top 100 Companies in the Corporate Responsibility Index published in the “Sunday Times Companies that Count”.

United StatesSodexho won the 2006 “Outstanding Business Partner of the Year Award” from the National Association of College Auxiliary Services (NACAS).

Sodexho won two “2007 Best Practice” awards for the “Energy Efficiency Partnership Program” developed at the University of California at Davis.

CustomersOffering balance and health

As the global leader in Foodservices and the world’s foremost corporate employer of dietitians, Sodexho is proud of our role in promoting healthy, well-balanced nutrition and has made the fi ght against obesity, described as a “pandemic” by the World Health Organization, one of its top priorities.

Chile“Atina Come Sano”: Tasty and Healthy

In 2006, Sodexho launched the nutrition educational program “Atina Come Sano” (Atina eats healthy food) to give children a taste for wholesome, varied food and a healthy lifestyle. A “Nutritional Traffi c Light” system allows them to identify the nutritional value of the various dishes available and compose a balanced menu. Today, some 30 private schools with more than 3,000 students are learning good eating habits that will serve them their entire lives.

Sodexho also involves parents in this educational approach. They receive a monthly newsletter and can consult the recommendations posted each week to help them plan weekend meals.

Sodexho has developed a partnership with INTA (Institute of Nutrition and Food Technology) at the University of Chile which audits and certifi es the program.

InternationalFreedom, pleasure and health with the “Vitality” offer

Sodexho has developed “Vitality”, an innovative offer allowing customers to balance their menus during the week. The offer combines taste, variety and know-how with original recipes featuring the wealth and fl avor of local products. More than just low-calorie recipes, “Vitality” ensures varied, fl avorful meals.

Everyone wants to eat a well-balanced diet, but people are often rushed at mealtime and do not always know what to buy or consume throughout the day. To help customers make their choices and achieve a healthy balance, Sodexho provides information on the nutritional qualities of products and explains how to prepare tasty recipes.

Developed by Sodexho in Sweden with the support of Sodexho’s operations in all the European countries, “Vitality” has been adopted in Sweden, Austria and Morocco and is being developed in the Czech Republic, Finland, France, Italy, the Netherlands and Portugal. Adapted to local products, eating habits and cultures, the offer has been enthusiastically welcomed by customers, who are increasingly taking their meals at company restaurants where it is available.



IndicatorFor fiscal 2007, 99% (89% in 2005) of subsidiaries provide clients, customers and employees with information and training on good eating habits.

Basis for consolidation: 95% of subsidiaries weighted on revenue.

2006-2007 AwardsFood Management Magazine awarded Sodexho its “Best Concept” prize for “Sweet Shots”. The low-calorie treats are designed to deliver big fl avor in convenient portable packages, allowing customers to enjoy snacks in the workplace without worrying about calories.

FranceSodexho received the “Public-Private Action Award” for Culture Vouchers given out to students in the Centre region.

United KingdomThe magazine Employee Rewards and Benefits awarded Sodexho the prize for “Childcare Voucher Provider of the Year”.

United StatesThe Vegetarian offer introduced in Atlanta Public Schools in Georgia won the Golden Carrot Award. The award, presented by the Physicians’ Committee for Responsible Medicine, recognizes Sodexho’s innovative approach to encouraging healthy eating habits among children.

EmployeesMaximizing the value of talent and diversity

Sodexho’s success stems from the motivation, expertise and diversity of our employees. The Group is always striving to attract, develop, motivate and retain talented individuals. Committed to equal opportunity and diversity, Sodexho views these differences as an asset.

Marit TeiglandVice President Gulf of Mexico, Remote Sites

“Most limits on what you can do are in your own head. Never stop challenging them and you will discover Sodexho and the world are open to you.”

A hands-on individual, Marit Teigland embodies the true spirit of Sodexho. Involved, committed and ambitious, she leverages life’s opportunities and turns them into successful endeavors.

Marit began her career in 1997 as a Managing Director, when she was recruited to set up a new remote site entity in Norway. She spent her its fi rst six months prospecting in the oil and gas community.

In August 1998, the team was awarded the fi rst contract at three ExxonMobil offshore platforms. Marit continued growing the business, and within two years, it was delivering revenue of 40 million euros, with 600 employees on 20 sites offshore in Norway.

In 2005, Marit became Business Development Director for the Asia Pacifi c Zone, and at the end of 2007 was named Vice President for Remote Sites in the Gulf of Mexico, thus becoming a member of the organization’s Executive Committee.

Marit is very enthusiastic about her work: “ As part of the Remote Sites team, I get to go to some of the most beautiful places on our planet.” Colleagues describe Marit as a woman who likes challenges and she is proud of having entered a male-dominated industry where she has earned the respect of internal colleagues, external clients and the community. Marit recognizes that she has been fortunate in having the support of people both inside and outside the Group in managing a booming business: “With our rapid growth and my limited experience, I needed good advice. I found my mentors in the local oil and gas industry and among the members of my management team.”

When asked if she had any advice for new employees joining Sodexho, Marit replies with enthusiasm and energy: “Most limits on what you can do are in your own head. Never stop challenging them and you will discover Sodexho and the world are open to you.”

Marit has two children and three grandchildren. She started her university studies when her children started school. They always accompanied her for her fi rst relocations. “Being a mother and at the same time pursuing a challenging career is not so easy,” she admits, “but it becomes what you make of it.”



Indicators

Rate of internal promotionFiscal 2007: 20% of vacant site manager positions or equivalent were fi lled through employee promotions and 28% of vacant management positions by the promotion of site managers or equivalents.

Employee diversitySodexho employs people with 132 different nationalities in 80 countries.

2006-2007 Awards (Human Resources Development)

FranceSodexho won the “Silver Award” at the fi rst “Individual Right to Training Awards” presented in 2007 by the Demos Group. The awards are given for the most successful integration of rights to individual training, widespread access to training and career development prospects. 2,000 Sodexho employees received training in 2006 and 4,000 in 2007.

GermanySodexho was placed among the “Top 10” of “2007 Employers” in a survey by the Institut Geva. The study examined Human Resources strategy, organization and working conditions, retirement and social benefi ts, the company’s attractiveness in the market, career development opportunities, job security, manager retention rates and team spirit.

United StatesThe prize for “Best Business Management Concept” was given to Sodexho by Food Management Magazine for COCE (Circle of Customer Excellence), an employee training program to improve service quality, increase sales and ensure greater customer satisfaction. The rate of satisfaction indicated by students in schools with COCE programs rose by 15%.

International Quality and Productivity Center, an international company specializing in senior executive training, awarded Sodexho the “Best Hiring Program” prize for its outstanding managerial practices in four areas: problem solving, innovation, brand strength and return on investment.

2006-2007 Awards (Diversity)

BelgiumSodexho received the “Equality Diversity” label from the Federal Ministries of Employment and Equal Opportunity.

CanadaSodexho obtained Gold PAR (Progressive Aboriginal Relations program) accreditation for the third year from the Canadian Council of Aboriginal Businesses (CCAB) in recognition of the Group’s commitment to Aboriginal communities for the past 20 years.

The Women’s Affairs Network of Quebec presented Marie Line Beauchamp, Vice President, Operations, with the “2006 Quebec Businesswomen” prize in the Private Company Manager category.

FranceSodexho won the “2006 Corporate Diversity Award for Innovations” for its commitment to promoting equal opportunity. The award was presented at the closing ceremony of the 18-city “Diversity Tour de France” launched in October 2006 to build corporate awareness and support for progressive approaches to diversity, highlighting positive examples and best practices.

United StatesSodexho was selected:

by HRC - Human Rights Campaign – in its 2008 Corporate Equality and Best Places to Work with a perfect score of 100;

by Profiles in Diversity Journal in the “Top 10 2007 Innovations in Diversity Award”;

by DiversityInc for the third year as one of the 50 companies most committed to promoting diversity;

by Latina Style Magazine for the fi fth year, among the 50 companies offering the best opportunities to Hispanics and in the “Top 60” of Hispanic Business Magazine for its commitment to the Hispanic community;

by Hispanic Trends among the Groups favoring supplier diversity;

by Black Enterprise Magazine as one of the top 15 companies promoting employee diversity;

by Asian Enterprises Magazine, for the third consecutive year, in the “Top 20” of the groups most committed to Americans originating in Asia Pacifi c”;

by Working Mother Media in the “Top 20” of companies encouraging women employees with multicultural backgrounds.

ERE Media. Inc awarded Sodexho the prize for the Best Hiring Program for diversity.

•

•

•

•

•

•

•

•



CountriesFighting hunger and malnutrition

Sodexho refuses to accept the fact that 854 million people worldwide, including 200 million children, suffer from hunger and malnutrition. To help combat this far-reaching problem, the Group is expanding our STOP Hunger program to our main host countries, encouraging employee involvement and developing many new initiatives.

STOP Hunger For Fiscal 2007, STOP Hunger initiatives throughout the world raised a total of 2.7 million euro for organizations involved in the fi ght against hunger, allowing them to serve more than 721,000 meals to the homeless.

The STOP Hunger program, launched more than ten years ago in the United States, is being gradually rolled out in the countries where the Group operates. The aid and initiatives of Sodexho employees, customers, clients and suppliers fall into four categories:

Encouraging volunteer work: Sodexho encourages our employees to demonstrate their service spirit through initiatives to combat hunger in local communities.

Organizing information and training programs on well-balanced nutrition: vocational training for the unemployed and the homeless and education in healthy, teaching the basics of well-balanced eating without wasting food.

Collecting food donations: packaged and fresh surplus food or prepared meals distributed by associations committed to the fi ght against hunger.

Fundraising: support and sponsorship of programs to combat hunger and malnutrition.

Indicator

STOP Hunger Fiscal 2007During fiscal year 2007, 22 countries (Argentina, Australia, Belgium, Brazil, Canada, Finland, France, Germany, Hungary, Ireland, Madagascar, Mexico, Morocco, Netherlands, Norway, Peru, Poland, Romania, Russia, Singapore, United Kingdom, United States) conducted 229 major STOP Hunger initiatives and developed partnerships with 153 NGOs, associations, and charities.

•

•

•

•

The Sodexho Foundation in the United KingdomSince it began in June 2005, the Sodexho Foundation has raised nearly 250,000 pounds sterling to combat hunger and malnutrition in the United Kingdom, where four million people lack the resources to eat adequately.

It supports a number of organizations such as Feed the Children, National Children’s Homes and the St. Vincent de Paul Society and has entered a three-year partnership with FareShare, a UK charity that redistributes surplus quality goods to those in need.

FareShare – Sodexho partnershipIn 2006, the Sodexho Foundation donated 95,000 pounds sterling to FareShare, which allowed the charity to provide more than 220,000 meals. Sodexho employees volunteered 357 hours to distribute eight tons of food. In September 2007, Sodexho launched a new fundraising campaign in all the divisions. The Sodexho Foundation plans to support several local charity initiatives, launch a nationwide employee volunteer program and encourage suppliers to join the Group in working to combat hunger. Sodexho will also increase its contribution by taking advantage of the possibility of donating a percentage of wage taxes to charitable programs.

Tony Lowe – Chief Executive, FareShare.

“Becoming a partner of the Sodexho Foundation has had a huge impact on FareShare’s ability to grow and develop over the past two years. Sodexho’s fantastic contribution has enabled us to support many more organizations providing much needed food to thousands of people living on the margins of society and helped us develop important training and education programs aimed at improving the health, well-being and employability of many of these vulnerable people.”



2006-2007 Awards

United States“Feeding Rhode Island’s Future”1 wins Food Management Magazine’s Best Concept Award

Countless studies indicate that children who eat breakfast and lunch perform better on standardized tests, are tardy or absent less often and are more attentive in class. In the state of Rhode Island, however, many eligible high school students do not apply for the National School Lunch Program’s free and reduced priced meal plan (NSLP). Even though students in the program retain their anonymity at the cash register, they would rather skip lunch than risk being labeled “poor”.

To erase the stigma of applying for assistance and show students that school meals can be healthy and tasty, Sodexho General Manager Solange Morrissette began coordinating a two-day NSLP application drive at Tolman High School and 15 other local high schools. To make the event exciting, she enlisted the sponsorship of Rhode Island Credit Union and a popular radio station, Hot 106. Hot 106 personalities were on-site with their booth to interact with students, play games and music and encourage everyone (regardless of eligibility) to fi ll out NSLP applications as entry forms for prizes being given away. This provided a non-threatening way to turn in applications because the completed forms were viewed by students as opportunities to win movie tickets, CDs, tee shirts and duffl e bags. There was an immediate 18% increase in the number of students participating in the program.

1 The “Feeding Rhode Island’s Future” initiative has been developed within the scope of the STOP Hunger program.1 The “Feeding Rhode Island’s Future” initiative has been developed within the scope of the STOP Hunger program.


1. Making Every Day a Better DayExperiencing and Sharing Quality of Life

2 activities in the service of the Quality of Life

97% of Group revenues

12,946 million euro in consolidated revenues

17,114 million U.S. dollars in consolidated revenues

Experiencing and Sharing Quality of Life

Sodexho’s global offer covers Food and Facilities Management services as well as Service Vouchers and Cards to create sustainable value for its clients and improve the wellbeing of its customers throughout the world.Employees in companies, students and teachers in schools and universities, patients and health care personnel in hospitals, inmates in correctional facilities, seniors in specialized nursing homes and retirement communities, personnel on major onshore and offshore projects… they all benefi t from the expertise of Sodexho and the professionalism of our dedicated teams, specifi cally trained to Improve their Quality of Daily Life.


3% of Group revenues

7.5 billion euro in issue volume

447 million euro in consolidated revenues

591 million U.S. dollars in consolidated revenues

310,000 clients (excluding individuals)

20.2 million benefi ciaries

1 million affi liated partners

Source: Sodexho


Corporate Services

Leisure

Defense

Correctional Services

Health Care

Seniors

Education

Remote Sites

D

D

D

D

D

D

D

D


Making Every Day a Better Day 1.Experiencing and Sharing Quality of Life

Creating value with “Quality of Life” servicesSodexho expertise relies on anticipating client needs, applying the Group’s broad experience and delivering comprehensive services. With our global scope, Sodexho designs and implements customized solutions to create sustainable value for our clients worldwide. Our teams, focused on the needs of customers, combine a service spirit with high standards of quality, safety and health and environmental protection to improve the Quality of Life of customers.

4,953953 6,546546 37%37% 135135,982982 15,37115,371Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Sites

Source: Sodexho

Achievements

FranceThe “Equilibre” Program for working adults earned the PNNS 2 (National Nutrition and Health Plan) label. Sodexho is the fi rst Foodservices company to receive the label from the French Ministry of Health.

IndiaDLF Builders has delegated to Sodexho the management of three shopping malls in New Delhi, Gurgaon and Chandigarh covering 682,000 total square feet.

SpainSodexho enjoyed successful Facilities Management expansion. Chosen in 2005 to deliver technical maintenance services for major clients such as Coca-Cola and Barcelona Football Club, Sodexho doubled its sales in Facilities Management services in Fiscal 2007 and achieved ISO 14001 certifi cation.

United KingdomING has extended the range of Facilities Management services outsourced to Sodexho with a new, three-year contract worth 12 million pounds sterling. The new services include engineering, security, help desk, space planning, waste management and porterage.

United StatesFood Management Magazine awarded Sodexho its “Best Concept” prize for “Sweet Shots”, a concept delivering big fl avor in small packages for a low-calorie treat in the workplace.


CORPORATE SERVICES

No.2 worldwide – FoodservicesD



EventsSodexho partnerships in 2007 included:

the Rugby World Cup, September 7-October 20, 2007 in France and the UK supplying 110,000 hospitality packages and 185,000 travel packages to fans;

the World Scout Jamboree for 31,000 scouts and 10,000 volunteers at Hylands Park in Chelmsford, UK on July 27-August 8, 2007;

Special Olympic European Youth Games, September 30-October 6, 2007 in Rome, Italy, with 1,400 athletes, 400 trainers, 2,000 volunteers, and 3,000 parents from 57 countries.

Market trendsThree key trends are dominating the market:

companies are seeking partners capable of supporting their development. Sodexho ensures integrated management of all their support services while optimizing value;

to be closer to new prolific markets and cut production costs, clients are moving into the emerging regions of Asia, South America and Central and Eastern Europe. Sodexho’s wide geographical scope and capabilities in these regions give us strong local knowledge, as well as valuable sustainable development expertise. Therefore Sodexho is able to partner with our clients as they expand abroad;

globalization is creating new human resources challenges – among these are managing an increasingly mobile workforce and attracting and retaining talents.

Sodexho’s Quality of Life Services help clients create work environments that foster productivity, comfort, convenience and efficiency, thus increasing client competitiveness.

Source: Sodexho

Over 250 billion euro in

estimated total market value*, including:

85 billion euro in Foodservicesoutsourcing rate: 79% (highest rate: USA around 97%; among the lowest rates: Russia around 30%);

outsourced market average annual growth rate: between one percent and two percent over the next three years.

(*) The market value for Facilities Management services (excluding Foodservices) is more than double that of Foodservices.

•

•

Sodexho estimate

•

•

•

•

•

•

KLM – Sodexho (The Netherlands)“The transition to Sodexho has been completed successfully. Based on the fi rst deliverable, the fi nancial data warehouse, we are confi dent that Sodexho will deliver the promised performance.”

Roel Varossieau, Vice President Demand Management & Real Estate – KLM.

Successful transition and guaranteed performanceBuilding on a longstanding relationship of trust, the Dutch airline company KLM and Sodexho have expanded their partnership. Building on the success of 15 years of providing Foodservices, Sodexho is now supplying support services, and has integrated 255 KLM employees who specialize in Facilities Management services.

KLM outsources its Facilities Management servicesIn late 2003, KLM decided to outsource its Facilities services to cut costs while improving service quality. The contract encompasses more than thirty Food and Facilities Management services for 90 KLM buildings covering a total of two million square feet in the Schiphol region. Knowing that employment issues related to 255 KLM staff members were a key concern for KLM, Sodexho pledged to ensure smooth team transfers and continuous quality service.

Sodexho builds a customized offer in partnership with KLMSodexho won the KLM contract in late 2006, in particular thanks to its team management experience and the quality of its staff engineering offer. It proposed taking 255 KLM employees on board and recommended jointly defi ned Service Level Agreements, along with a clear procurement policy and a transparent online reporting system.

Close cooperation for a successful transitionA strong partnership with a project management team made up of Sodexho and KLM employees has helped ensure a smooth transition. Fully transparent reporting has been implemented. Today, Sodexho is benefi ting from the expertise of the newly integrated KLM specialists, and customers are enjoying guaranteed service quality.

A 250 million euro contract over five years36 Food and Facilities Management services Building maintenance, crew transport, uniform distribution and waste management.



Sodexho ExperienceAn innovative food offer rolled out across countries

An innovative, process-based foodservice offer, “be’ by Sodexho”, provides high quality, customization and evolution to clients. The offer is personalized using Sodexho’s Personix™ tool, which identifi es customers’ catering needs and expectations by taking into account their mindset and consumption behaviors at work. Surveys pinpoint what customers expect from their catering outlets: staff restaurants, coffee corners, take-aways, etc. Local culinary traditions and healthy options are offered, providing plenty of choice. Programmed theme changes supply a variety of visuals, while menus are periodically adapted, taking into account seasons, customer tastes and comments. After its great success in the UK, “be’ by Sodexho” was duplicated in Ireland, Finland and Belgium and is now continuing its international growth. Customized applications of this offer have been well-received by many clients, including Nokia and Cisco.

Among our clients…Alcatel: Austria, Belgium, Canada, France, Morocco, Poland, South Korea, USA.Axa: Australia, Belgium, France, Germany, UK, USA.Bristol Myers Squibb: Argentina, Colombia, France, Italy, Mexico, Netherlands, USA.Canon: Belgium, France, Germany, Italy, Malaysia, Netherlands, Norway, Russia, Spain, Sweden, UK, USA.Cisco: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Luxembourg, Netherlands, New Zealand, Norway, Sweden, Switzerland.General Electric: Canada, Czech Republic, Finland, Norway, Russia, Sweden, USA.GlaxoSmithKline: Austria, Belgium, Canada, Chile, Colombia, France, Germany, Ireland, Morocco, Netherlands, Poland, UK.HSBC: China, France, India, Malaysia, UK, USA.IBM: Chile, Colombia, Costa Rica, Czech Republic, Denmark, France, India, Italy, Peru, Russia, Sweden, UK, USA, Venezuela.Pfizer: Belgium, Brazil, Chile, Finland, France, Ireland, Italy, Norway, Peru, Spain, Sweden, Turkey, UK, USA.Procter & Gamble: Argentina, Belgium, Brazil, China, Colombia, France, Germany, Ireland, Italy, Poland, Russia, UK.



LEISURED

AchievementsBelgium: BMW and Sodexho opened “Enjoy” restaurant, offering the public a gourmet menu in a refi ned décor.

France: Bateaux Parisiens, a Group subsidiary, opened the “Café Seine” on the riverside at the foot of the Eiffel Tower.

United Kingdom: Sodexho received the “Best Event Organizer” and “Best Use of Facilities” awards for services at Knebworth House at the fi rst Eventia Corporate Event.

United States: In partnership with St. Bartholomew’s Church, Sodexho is inaugurating the “Café St Barts”, its fi rst direct-to-customer restaurant in New York, on Park Avenue, one of the world’s most prestigious locations.

Société d’Exploitation de la Tour Eiffel (SETE) – Alain Ducasse group – Sodexho“It is a great honor and an exciting challenge to put the expertise of the Alain Ducasse Group, its culinary creativity and excellent service quality at the service of one of the most symbolic venues in Paris. We could not have embarked on this grand adventure without Sodexho’s experience.”

Alain Ducasse

An ambitious partnership for the Eiffel TowerThe Eiffel Tower receives 6.7 million visitors each year. To satisfy this diverse clientele, our client wanted to offer a restaurant experience in keeping with the celebrated monument and suited to varying customer profiles. In 2006, the Sodexho-Alain Ducasse partnership was awarded the concession for a conceptual, economical culinary approach.

An original concept for each fl oorThe Sodexho-Alain Ducasse partnership proposes a dining experience at the high end of each segment to meet a range of customer expectations and budgets. Contemporary snacks at low prices are available on each level of the Eiffel Tower. The fi rst fl oor restaurant turns from theme-based counters at noon into a trendy dining spot at night. On the top fl oor, the legendary “Jules Verne” restaurant offers nouvelle cuisine française with three types of clienteles: business clients at midday, international tourists in early evening and sophisticated diners at night.

Combining talentsTo create this innovative offer, Sodexho partnered with prestigious names. In a newly designed décor by Patrick Jouin, the renowned designer, the Alain Ducasse Group joins its gastronomic creativity with Sodexho’s 40 years of experience, resources and management of outstanding venues to ensure an unforgettable experience for every diner.

Offering exceptional momentsWith upscale services, prestigious venues and memorable events, Sodexho combines creativity, expertise, refi nement and friendliness to give daily life its exceptional moments.



Sodexho Experience

United KingdomBusiness is blooming

After providing food and hospitality services at England’s renowned Chelsea Flower Shows for twenty years and the Tatton Flower Show for eight years, Sodexho has added the Hampton Court Palace to its roster of prestigious clients, a sign of the renewed confi dence of the Royal Horticultural Society.

Among our clients…

Prestige Restaurants and EventsArt Café (Modern Art Museum restaurant), Strasbourg (France).Ascot Racecourse, Berkshire (UK).Blenheim Palace, Oxfordshire (UK).Château de Vaux-le-Vicomte, Paris area (France).Children’s Museum of Indianapolis, Indiana (USA).Cincinnati Zoo and Botanical Gardens, Ohio (USA).Detroit Institute of Art, Michigan (USA).Epsom Downs Racecourse, Epsom (UK).Huntington Library Gardens Café, Pasadena, California (USA).L’Atelier Renault, Paris (France).Le Jardin du Petit Palais, Paris (France).Le Roland Garros, Paris (France).Les restaurants de la tour Eiffel, Paris (France).Murrayfield Stadium, Edinburgh (Scotland).Racecourses of Auteuil, Chantilly, Enghien, Longchamp, Maisons-Laffi tte, Vincennes (France).St. Bartholomew’s Church, New York (USA).The Churchill Museum & Cabinet War Rooms, London (UK).The John G. Shedd Aquarium, Chicago, Illinois (USA).

Private Clubs, Associations and Conference CentersBlack Canyon Conference Center, Phoenix, Arizona (USA).Centre d’Affaires Etoile Saint-Honoré, Paris (France).Conference Center at NorthPointe, Columbus, Ohio (USA).Desert Willow Conference Center, Phoenix, Arizona (USA).Johnson Space Center, Houston, Texas (USA).La Maison des Polytechniciens, Paris (France).Les Salons de la Maison des Arts et Métiers, Paris (France).San Ramon Valley Conference Center, California (USA).Tecnológico de Monterrey (Mexico).The Parkway Hotel at the Barnes Jewish Medical Center, St. Louis, Missouri (USA)

Directors Tables and Executive Dining RoomsBank of America, Ottawa (Canada).BAT, London (UK).BNP Paribas (Headquarters), Paris (France).EADS (Headquarters), Paris (France).ING Bank, London (UK).



DEFENSED

A commitment to serviceBolstered by extensive experience of military life at home and abroad, Sodexho is committed to supporting military personnel and their families by facilitating their careers and improving their Quality of Life. Sodexho tailors its offers, from Foodservices to complex logistics solutions, to maximize the resources of the armed forces.

AchievementsCyprus: the British Ministry of Defence has entrusted Sodexho with Food and Facilities Management services at the Sovereign Base.

Singapore: For the third time, Civil Defense honored Sodexho with the “Distinguished Defense Partner Award” for outstanding Foodservices.

United States

The Defense Department honored Sodexho with the prestigious “Liberty Award - Pro Patria” for its commitment to National Guard and Reserve employees.

Greg Verone, President of the Government Services Division of Sodexho, Inc., was appointed to the Armed Services YMCA Board.

•

•

Market trendsIn an effort to retain troops and cut costs, armed forces today are seeking fl exible, creative partners ready to act as genuine stakeholders in the military community. Under “Defense Career Partnership” agreements with the United Kingdom, France and the United States, Sodexho is committed to preferential hiring of military family members on bases and enabling defense personnel to continue their careers later on within the Group.

Source: Sodexho

Over 20 billion euro in estimated

total market value*, including

6.5 billion euro in Foodservices:outsourcing rate: 35% (highest rate: Italy around 75%; among the lowest rates: Netherlands: less than fi ve percent);

outsourced market average annual growth rate: between four percent and fi ve percent over the next three years.

(*) The market value for Facilities Management services (excluding Foodservices) is about 2.5 times that of Foodservices.

•

•

Sodexho estimate

444444 587587 3%3% 1313,482482 1,1041,104Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Sites

Source: Sodexho



Swedish Defense Forces – Sodexho (Sweden)“We are very impressed by the resources Sodexho provides and we consider Sodexho to be a very serious partner.”

Anitha Jansson, Client Relations, Swedish FM Logistics Directorate.

Quality of Life at the best priceSweden’s armed forces fi rst called upon Sodexho to optimize costs while providing quality Foodservices in 2005 at the Skovde garrison in Stockholm, and again in 2006 and 2007 at fi ve training camps in the Norbotten region.

Mission accomplished!Selected for its experience, innovations and quality offerings at the right price, Sodexho has not only succeeded in reducing costs by 25% while maintaining service quality, but also in generating additional revenue by renting facilities for civilian purposes.

Sodexho’s performance has prompted the armed forces to consider expanding the partnership through further outsourcing in the coming years.

Sodexho Experience

FranceSodexho reinforces deployed French Army’s projected forces

The relationship forged between Sodexho and the French Armed Forces over the last six years has borne fruit: Sodexho has been chosen to manage camps under the plan to outsource support services for the French Army’s projected forces.

Among our clients…Australian Defense Force, six bases (Australia).Astilleros y Maestranzas de la Armada Naval Base (ASMAR), Temuco (Chile).British Ministry of Defense, Riyadh (Saudi Arabia).British Sovereign Base Area (SBA), Cyprus.Civil Defense Force Basic Rescue Training Centre (Singapore).Garrisons of Aldershot, Catterick, Colchester, Salisbury Plain, York and RM Bases in SW England (United Kingdom).Military Medical Institute, Warsaw (Poland).Naval Hospitals, Concepcion, Tacalhuano, Vina (Chile).Naval Officers Club, Delhi and RSI Army Club, Pune (India).Swedish Defense Forces, Skovde Garrison and fi ve sites in Norbotten Region (Sweden).US Marine Corps, 55 bases (USA).

In-theatre military forces

US Defense Logistics Agency (South Korea).



CORRECTIONAL SERVICESD

Laying the groundwork for resettlementSodexho partners with architects, engineers, builders and bankers to design, build and manage correctional facilities and post-release rehabilitation hostels. It aims to improve inmate living conditions and lay the groundwork for successful resettlement by encouraging prisoners to maintain family ties and help them fi nd jobs and housing upon release.

AchievementsFrance: The World Schools Association (Association des Ecoles du Monde), the Ministry of Justice and SIGES, a Sodexho subsidiary, are contributing to a humanitarian project in Madagascar. Prisoners at the Liancourt penitentiary are producing manual presses to make clay bricks for use in building permanent dwellings.

United Kingdom: the Independent Monitoring Prison Board praised “the safe and humane environment” created the very fi rst year at Peterborough, a facility managed by Kalyx, a Group subsidiary.

Market trendsFor ethical reasons, Sodexho only provides services where the staff do not carry fi rearms and only in democratic countries where there is no death penalty and where the ultimate aim of imprisonment is rehabilitation. While the number of offenders and the demand for new prison construction is rising worldwide, there is increasing determination in many countries to improve prison conditions and reduce the rate of recidivism. More countries are now seriously considering using Sodexho, since the company has shown it delivers effi cient holistic solutions, from design to everyday operational management, that meet these societal needs.

Source: Sodexho

211211 279279 2%2% 3,022022 127127Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Sites

Source: Sodexho



Ministry of Justice – Kalyx, Sodexho Group (United Kingdom)“Salford City Council is delighted to be working with Kalyx at HMP Forest Bank prison, to train its offenders to get real jobs helping to regenerate Salford and re-introduce its citizens so that they can be socially responsible members of the community “

Barbara Spicer, Chief Executive of Salford City Council.

Resettlement through employmentAt HMP Forest Bank, Kalyx has teamed with local government and companies to train prisoners and offer them genuine employment opportunities, thereby helping to reduce the rate of recidivism.

Committed companiesKalyx has instituted training workshops to provide basic skills for jobs in the local construction and foodservices companies, which are committed to providing employment upon their release.

Benefi ts for the communityThe training leads directly to real jobs: in 2006, 371 prisoners had jobs to go to upon release, thus improving the likelihood of long-lasting resettlement. Local employers, agencies and organization now see HMP Forest Bank as a source of workers and part of the community.

Sodexho Experience

Longuenesse – FranceA socially responsible commitment to sustainable employment

Siges signed a partnership with the Regional Association for Resettlement in the Building Industry. The association, created by Siges, will provide jobs for 80 prisoners upon their release over a three-year period.

Among our clients…Chile (Food and Facilities Management services)Ministry of Justice3 prisons: La Serena, Alto Hospicio, Rancagua.France (Food and Facilities Management services)Ministry of Justice• 8 prisons in the North: Bapaume, Liancourt 1, Liancourt 2, Lille-

Séquedin, Longuenesse, Loos, Maubeuge, Saint-Mihiel;• 6 prisons in the South: Aix-en-Provence, Avignon, Grasse, Salon-de-

Provence, Tarascon, Toulon-La Farlède.Italy (Foodservices)Ministry of Justice16 prisons.Netherlands (Foodservices)Ministry of Justice46 prisons.Portugal (Foodservices)Ministry of Justice7 prisons.Spain (Foodservices)Catalonian Government4 correctional premises.United Kingdom (Specialist services)Home Offi ce / Scottish Prison Service• 4 prisons: Forest Bank, Bronzefi eld, Peterborough and Addiewell, Scotland, to be opened in late 2008;• 1 detention center: Harmondsworth;• 2 resettlement hostels for ex-offenders in Bristol.



HEALTH CARED

Caring about Quality of LifeSodexho offers a varied spectrum of services tailored to the specifi c needs of each health care facility and delivered by specially trained staff. Services include Foodservices, reception, information, hygiene, environmental management, free time activities and medical equipment maintenance. By ensuring a high quality Patient Experience, Sodexho also reassures their families and boosts staff motivation to make facilities more attractive and competitive.

AchievementsSegment opened in Slovenia with a Foodservices contract at the Golnik University Clinic.

BrazilSodexho received the “Prêmio Top Hospitalar” and “Top of the Mind” awards, along with JCI (Joint Commission International) and ISO 14001 - V. 2004 certifi cation.

CanadaThe York Central Hospital in Toronto has awarded its Food and Facilities Management services provision to Sodexho. The number of outsourced services makes this the largest contract of its kind ever implemented in a Canadian hospital.

GermanyAcquisition of Gastro Kanne, which runs cafeterias and shops in hospitals (9 sites, 28 franchises).

IndiaColumbia Asia has outsourced Food and Facilities Management services to Sodexho at the Fortis Hiranandani Health Care facility in Mumbai.

ThailandThe Bangkok Medical Centre (5 stars, 550 beds) earned JCI certification (Joint Commission International) with the assistance of Sodexho in part, for its outstanding Food and Facilities Management services.

United KingdomNuffield, a not-for-profi t organization, selected Sodexho to handle Foodservices for patients, visitors and staff at its 39 hospitals. The contract makes Sodexho the leader in the country’s private hospital market.

United States Moses Cone Medical Center (Greensboro, North Carolina) chose Sodexho’s Clinical Technology Management, a specialized Sodexho health care service, to maintain more than 13,000 pieces of high-tech diagnostic equipment (CAT scans, MRI, X-ray equipment, etc.).

Sodexho has launched two new services “First Impression and Parking” and “Concierge Services” to provide arrivals with a cheerful welcome and improve Quality of Life at the hospital.

•

•


Source: Sodexho

No.1 worldwide – Foodservices



Market trendsIncreasing longevity is leading to higher health care expenditures. The rising cost of ever-more sophisticated technology is resulting in shorter stays, mergers of facilities and a growing number of alternative solutions to hospitalization.

Hospitals are now competing for patients and encountering problems in recruiting skilled nursing and support service staff. They are expected not only to deliver fi rst-rate medical care, but also to offer a palette of non-clinical services to enhance the experience of their patients, visitors and personnel.

By improving the Quality of Life in health care facilities, Sodexho is helping clients realize their strategic goals, remain fi nancially stable and expand their market share.

Source: Sodexho


estimated total market value*, including

45 billion euro in Foodservices:outsourcing rate: 31% (highest rate: Spain around 65%; among the lowest rates: Brazil around 10%);

outsourced market average annual growth rate: between four percent and fi ve percent over the next three years.

(*) The market value for Facilities Management services (excluding Foodservices) is about three times that of Foodservices.

•

•

Sodexho estimate

Nebraska Medical Center – Sodexho (United States)“We are fortunate to have the strong, progressive Sodexho leaders who develop quality services for our patients, families and employees. Their efforts truly enhance our organization’s mission to deliver quality, compassionate care.”

Marty Carmody, Executive Director of Support Services, Nebraska Medical Center.

A shared commitment to serving patientsSince 1986, the Nebraska Medical Center of Omaha has been sharing with Sodexho its commitment to patients. To differentiate the Center in an extremely competitive marketplace, and to fi eld test the Patient Experience model, Sodexho bolstered the partnership by making it a Patient Experience Pilot Account.

“Well-being” servicesIn 2005, the Nebraska Medical Center (689 beds) became a pilot account in Sodexho’s “Patient Experience” program. For one year, Sodexho introduced new services including Housekeeping Upon Request and the expansion of Sodexho’s At Your Request-Room Service Dining® patient dining program, now available at any time of the day or night. The use of touchscreens to facilitate communication is being tested. Also, for the fi rst time, Foodservices and Facilities Management teams were given joint training under a new program called CARES2.

Making the difference – togetherSodexho’s leading-edge programs help Nebraska Medical Center market their services and stand out from their competitors. In exchange, Sodexho has gained a “living laboratory” to test its new services and survey the satisfaction of patients and staff. Sodexho has become a genuine partner in the hospital’s strategic plan.

The “Patient Experience” program has solidified the partnership in a “win-win” situation, as Bud Tice, Administrator of Physician Relations, emphasizes: “Sodexho employees are showcase quality… all are engaged and contributing to the success of Sodexho and the Nebraska Medical Center.”

2 CARES: Compassion, Accountability, Respect, Enthusiasm and Service2 CARES: Compassion, Accountability, Respect, Enthusiasm and Service



Sodexho Experience

FranceLuxurious treatment for new mothers

Based on its analysis of a survey conducted by the Institut des Mamans, Sodexho developed the Maternéa offer to give new mothers extra special attention:

welcome and receive new mothers with a welcome card, a congratulatory card, pretty dishware, and other special touches;

offer menu selections proposing full or light versions of wholesome meals;

fill in the corners with a mid-morning and afternoon snack;

create a friendly atmosphere with meal ideas and festive products for new fathers and friends;

provide individual nutritional advice by a dietician on a dedicated line during their stay or after returning home.

The Maternéa offer was tested at the Clinique Privée Associée in Rennes with highly encouraging results showing a 10% increase in satisfaction expressed by new mothers.

•

•

•

•

•

Among our clients…Aid Equipment, Stockholm County Council (Sweden).Albert Schweitzer Hospital, Zwijndrecht (Netherlands).Clinica Alemana, Santiago (Chile).Ebel FachKli nik, 7 sites (Germany).Fraser Health Authority, British Columbia (Canada).Hospital Albert Einstein, São Paulo (Brazil).Hospital 12 de Octubre, Madrid (Spain).Johns Hopkins Hospital, Baltimore, Maryland (USA).Liverpool Women’s Hospital NHS Trust (UK).Middelheim Academic Hospital, Antwerp (Belgium).Pantai Medical Centre, Kuala Lumpur (Malaysia).Paris Public Hospitals (AP-HP), 7 sites (France).Privatklinik Rudolfinerhaus, Vienna (Austria).Samitivej Sukhumvit Hospital, Bangkok (Thailand).Universita Cattolica Policlinico Gemelli, Rome (Italy).



SENIORSD

Creating the conditions to age gracefullyTrained to listen to and support the elderly, Sodexho teams are dedicated to creating the conditions required to grow old gracefully at home or in specialized facilities. With services designed to foster dignity, well-being, pleasure and social contact adapted to the individual’s age and degree of dependence, Sodexho aims to enhance the pleasure of taste and the joy of living in a warm, open environment.

Achievements

FranceSodexho obtained ISO 9001 - V. 2000 certification for its Food and Facilities Management services at nursing home facilities. The certification rewards the efforts undertaken since 1999 by Sodexho teams to adopt a Service Commitment approach.

Market trendsIncreased life expectancy is giving seniors greater demographic, economic and political infl uence. It also brings greater dependence for more members of the population and thus a growing need for specialized facilities.

Homes for the elderly have to provide more medical care while keeping costs from spiraling out of control. They must cope with problems of malnutrition, dependence and isolation among their residents, compounded by the diffi culty of recruiting skilled, devoted personnel.

Sodexho’s familiarity with this many-faceted market and experience in this demanding profession make it an ideal partner to support the lifestyle projects of eldercare facilities.

Source: Sodexho



30 billion euro in Foodservices:

outsourcing rate: 21% (highest rate: Japan 50%; among the lowest rates: Netherlands 5%);

outsourced market average annual growth rate: three percent to four percent over the next three years.

(*) The market value for Facilities Management services (excluding Foodservices) is about 2.5 times that of Foodservices.

•

•

Sodexho estimate

820820 1,084084 6%6% 1313,954954 2,7652,765Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Sites

Source: Sodexho

No.1 worldwide - Foodservices



Salvation Army – Sodexho (United Kingdom and Ireland)“Sodexho is more than capable of meeting our sometimes incredibly complex needs. The Sodexho team has been impeccable in identifying our concerns and tackling them directly and quickly. Their open and honest approach has helped to deliver enhanced service levels. We would be delighted to recommend Sodexho to other organizations.”

Mark Johnston-Wood, Territorial Property Director, The Salvation Army UK and Ireland.

An expanded assignment within a shared ethical cultureSodexho has been providing Foodservices at Salvation Army social service centers since 1995 and at its Territorial Headquarters (THQ) since 1998. In 2005, the organization decided to widen the scope of already outsourced services to encompass Facilities Management at the THQ and William Booth Memorial College in London. After a trial year, Sodexho won the contract, testifying to a 12-year partnership of trust and common ethical principles.

Combining services with cost-cutting and ethical valuesTo achieve maximum efficiency and rationalize expenditures at the THQ, which houses administration and central services, the Salvation Army asked Sodexho to determine the feasibility of expanded outsourcing. The one-year trial also involved William Booth Memorial College (WBC), built in 1929 as a home for cadets and their families. Key specifi cations included optimized service quality, detailed fi nancial and operational information, compliance with health and safety regulations and a matching ethical culture.

A trial year to ensure a successful transitionSodexho’s open, honest relationship with the Salvation Army team, its ethical and environmental approach to service provision and the smooth transition of contract implementation were rewarded by the signing of a five-year contract in July 2006. Within a year, costs were cut by 500,000 pounds sterling. In October, the Salvation Army won an award from the Chartered Institute of Purchasing and Supply for “Best Initiative”, largely due to its work with Sodexho.

In one year:A twofold increase in the recycling rate:

from 50% to 97.5%;

500,000 pounds sterling in savings.

Sodexho Experience

FranceSeniors rediscover a taste for snacks

In specialized facilities, Sodexho uses appeal to counteract problems of malnutrition and emotional isolation affecting the elderly.

The “Oh… snacks!” program is a highlight of the afternoon with elegant dishware and hotel-style service.

“Oh…delights!” goes even further by creating a real tearoom open to outside visitors where residents can spend pleasant moments with their loved ones.

Two ideal opportunities to rediscover the pleasure of taste at teatime!

People with disabilities

Thinking in terms of “Quality of Life”Enhancing Quality of Life for disabled people begins by integrating them into society. Through activities, training and public awareness campaigns, Sodexho helps them to integrate into a society that accepts difference.

Achievements

France Sodexho signed the Accord Handicap to “Make room for every skill”, with a view to doubling its hiring of people with disabilities by 2009.

In keeping with its involvement in the lifestyle projects of 800 homes for people with disabilities, Sodexho took part for the tenth time in the National Week for the Employment of People with Disabilities.

Sodexho Experience

France“One for all, all for one”

The ninth edition of the “One for all, all for one” national cooking contest drew the participation of 140 specialized facilities. At each center, a disabled person, a special needs teacher and a Sodexho cook shared a moment of complicity by forming a team to create an original dessert recipe.

•

•



Among our clients…Appalachian Christian Village, Johnson City, Tennessee (USA).Centro Medico P. Richiedei, Palazzolo, Brescia (Italy).Christie Gardens, Toronto, Ontario (Canada).Eichenhöhe Nursing Home (Red Cross), Hamburg (Germany).Fondation Caisses d’Epargne pour la Solidarité, 75 sites (France).Fundacion Sociosanitaria de Barcelona, 9 sites (Spain).Grand Hotel Philadelphia, Rotterdam (Netherlands).Korian, 104 sites (France).Lutheran Social Services, York, Pennsylvania (USA).Maison de Soins de Bettembourg (Luxembourg).Maison Marie Immaculée, 5 sites, Neufvilles (Belgium).Pension Schloss Kahlsperg in Oberalm, Salzburg (Austria).Retirement Homes-Stockholm Municipality (Sweden).Unitingcare Ageing-Northern Sydney Region, New South Wales (Australia).Wellwood, Newport (UK).



EDUCATIOND

Developing the sense of taste and the taste for successSodexho shares the aims of the education community. From pre-schools to universities, Sodexho supports the institutions’ mission of learning by creating safe and comfortable environments conducive to academic success. We offer the benefi ts of customized dining experiences and living and learning spaces, provided by our full palette of services that improve Quality of Life. Through our global range of service solutions, Sodexho is helping to build a successful future.

AchievementsEducation segments opened in India, Malaysia and Thailand.

BelgiumSodexho has launched the “Pleasure of flavor, Taste of wellness” charter to promote well-balanced eating habits among children. As Sodexho extends its mission beyond schools to the general public, nutritional information and advice is also provided on the website.

China – Hong Kong ISF (The Independent School Foundation) has chosen Sodexho to provide Food and Facilities Management services at its new establishment: “Cyberport”.

Sodexho obtained ISO 14001 certification for its Facilities Management services at the International School of Hong Kong.

•

•

SingaporeThe French School, an international school with an enrollment of 1,000 students, has expanded the range of services provided by Sodexho, from its existing Foodservices and cleaning services to include technical maintenance.

United KingdomSodexho made a successful bid for ISO 14001 re-accreditation for Food and Facilities Management services for the Wiltshire County Concil. Sodexho was the fi rst British company to obtain this accreditation.

United States – Campus ServicesSodexho was honored with the 2006 “Outstanding Business Partner of the Year Award” from the National Association of College Auxiliary Services (NACAS).


Source: Sodexho

No.1 worldwide – Foodservices



Market trendsFour main trends are impacting this market:

rising Asian demographics will bring about a sharp increase in global demand for Education. The world’s student population is expected to climb from 97 million in 2000 to 263 million by 2025, half of them Chinese or Indian. The estimated number of students studying abroad will jump from 1.7 million to an estimated 8 million during the same period;

increased use of new technologies is helping to expand online degree programs;

regional alliances and campus openings abroad are being stepped up to pool resources, attract students and facilitate exchanges between schools;

increasing competition is encouraging worldwide acceptance of the concept of accreditation as a system enabling institutions to gain recognition for their high quality curriculum, building and services standards.

These trends are leading colleges and universities to seek an experienced, worldwide partner capable of optimizing costs, building and running dynamic facilities and enhancing the institution’s reputation.

Source: Sodexho



60 billion euro in Foodservices;

outsourcing rate: 30% (highest rate: Canada around 70%; among the lowest rates: Japan around 25%);

outsourced market average annual growth rate: three percent to four percent over the next three years.

(*) The market value for Facilities Management services (excluding Foodservices) is nearly double that of Foodservices.

•

•

Sodexho estimate

•

•

•

•

The University of Tampa – Sodexho (Florida, United States)“Sodexho is more than just a business partner at The University of Tampa. They are dedicated to our success and put every effort into making our aspirations become a reality.”

President Ronald Vaughn – The University of Tampa.

The University turns toward the futureFounded in 1933, the University of Tampa currently has 5,300 students from each U.S. state and 100 countries. About 65% of students live on campus. With Sodexho as its partner since 1991, the university is prepared for the future with a completely revitalized campus structure, facilities and student services.

“Changing mind and place”In 1991, to help it prepare for a dynamic future, the university asked Sodexho to oversee the maintenance and upkeep of its buildings and grounds. To revitalize the campus structure and plant operations, Sodexho was asked in 1994 to design and develop a new Campus Master Plan. This marked the beginning of a close working relationship.

An environment for tomorrowTo pave the way for dynamic development, Sodexho introduced a new facilities plan, building schedule and comprehensive range of Facilities Management services. In 1997, Sodexho managed the construction of the campus’ fi rst high-rise residence hall. In 2002, Sodexho was asked to provide a campus dining program with retail concepts befi tting the fi rst-rate campus. And, in 2006, Sodexho and The University of Tampa signed a 15-year partnership agreement for Food and Facilities Management services.

On the path to successToday, thanks to Sodexho’s expertise and service spirit, the University of Tampa can focus on what it does best: education. President Vaughn estimates that the partnership with Sodexho has resulted in 20% initial savings per year. Best of all, the campus now enhances the quality of students’ daily life, offers a leading educational experience and contributes to their academic success.

45 buildings on almost 100 acres of land

5,300 students

Sodexho Foodservices staff: 141Facilities Management staff: 110



Sodexho Experience

FranceAttracting high school students with a tailor-made offer

Sodexho has created an innovative student restaurant designed to reverse the trend of high school students deserting their school cafeterias for off-campus fast food restaurants.

Students choose from a variety of experiences: a quick meal on stools at counters, a relaxed lunch comfortably seated around a coffee table, or a gathering of the “group” at a large table. Six self-service stations provide a host of possibilities for creating a balanced menu.

Judging by the 18% increase in meals served at Blanche de Castille High School in Le Chesnay (Paris area), Sodexho has created a winning recipe for success.

Among our clients…Abilene Independent School District, Texas (USA).Andrès Bello University, Santiago (Chile).Assumption College, Massachusetts (USA).Australian Institute of Management, Melbourne, Perth, Sydney (Australia).Brock University, St. Catharines, Ontario (Canada).Campus Sainte Thérèse, Ozoir-la-Ferrière (France).Chinese International School, Hong Kong (China).Gimnasio Moderno, Bogotá (Colombia).Helsinki Business College (Finland).Singapore American School (Singapore).Stockholm University (Sweden).Texas A&M University (Qatar, USA).The University of Economics, Prague (Czech Republic).University Hospital, Buenos Aires (Argentina).University of Bradford (UK).University of Cagliari (Italy).University of Technology, Eindhoven (Netherlands).French Lycées: Buenos Aires (Argentina), Antwerp (Belgium), Hong Kong (China), Frankfurt (Germany), Moscow (Russia), (Singapore), Madrid (Spain), Riyadh (Saudi Arabia), Johannesburg (South Africa), Seoul (South Korea), Istanbul, Izmir (Turkey), Bethesda (USA).International Schools: Perth (Australia), Hong Kong International School, Western Academy of Beijing (China), Bonn, Düsseldorf, Frankfurt, Munich, Wiesbaden (Germany), Black Forest Academy Kandern (Germany), Helsinki (Finland), Sotogrande (Spain), Izmir (Turkey).Jesuit Institutions: Colegio Antonio Viera, Pontificia Universidad Catolica (Brazil), Colegio San Ignacio (Chile), Ecole de Provence (France), Georgetown University (Qatar), Deusto University (Spain), Creighton University, Fairfi eld University, Fordham University, Loyola Marymount, Loyola of Baltimore, Loyola University New Orleans, Regis University, Rockhurst University, St. Peter’s College, Xavier University (USA).



REMOTE SITESD

Bringing Quality of Life to the ends of the earthSodexho boasts a unique combination of experience in challenging environments, technical expertise and a culturally diverse workforce to accompany clients during each step of a remote site’s life cycle, from design to environmental restoration following operations, while contributing to the sustainable development of local economies. With comprehensive services and state-of-the-art technological solutions, Sodexho ensures the comfort and safety its clients’ teams need to accomplish their assignments under extreme conditions.

AchievementsISO 9001-V. 2000 certifi cation for Sodexho in Algeria, India, Indonesia and Norway.

Sodexho’s Health, Safety and Environment practices have been recognized in Australia by ExxonMobil, in Chile by the Chilean Security Association, Antofagasta Minerals and Mining Company Anglo American, in New Caledonia by Goro Nickel, in Peru by Techint, on Sakhalin Island (Russia) and in the United Kingdom by RoSPA (Royal Society for The Prevention of Accidents) and the British Safety Council.

Canada, British ColombiaNova Gold chose Sodexho to provide Food and Facilities Management services at six camps located on the territory of the Tahltan people, with whom Sodexho has forged a relationship of trust.

LaosSodexho has established a full supply chain solution with a fi rst contract won in 2006, comprising sourcing through on-site transportation of food and a wide range of equipment necessary for life on a remote site camp.

MadagascarWith Rio Tinto and its local partner QMM, Sodexho contributed to economic and social development of the island in 2006 through 100% local procurement, 250 hours of training per employee and regular HIV prevention campaigns.

NorwayBP, ExxonMobil, Talisman and Transocean have adopted Sodexho’s “Healthy Food” concept.

United Kingdom, ScotlandSodexho received the “Social Responsibility Award” from the Cornerstone National Charity and the “Healthy Living Award” from the Scottish Consumer Council.

872872 1,153153 7%7% 2727,366366 1,3811,381Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Sites

Source: Sodexho

No.2 worldwide – Food and Facilities Management services



Market trendsSodexho Remote Site markets are benefi ting from four positive trends:

the rising price of energy and other natural resources is driving the oil and gas industries and mining groups to undertake long-term investments;

the trend towards mergers in these segments and resulting efforts to create synergies between businesses is resulting in an increasing number of invitations to tender;

the search for sustainable and less polluting energy sources such as liquid natural gas, nuclear power and hydroelectric dams is also giving rise to major investment projects;

the boom in Middle Eastern and Asian engineering projects is prompting clients to seek out a global, experienced partner, capable of managing large-scale work sites in often harsh environments.

Clients know they can count on Sodexho’s longstanding experience, international scope and expertise to provide the support they need to ensure their successful development.

Source: Sodexho

10 billion euro

in estimated total market value

(Food and Facilities Managementservices)

Sodexho estimate

•

•

•

•

BP - Sodexho (Indonesia) – Tangguh Papua coastal camp“BP was particularly impressed with Sodexho’s commitment to the project ensuring that issues related to schedule, quality and costs were attended to in a timely manner and in a way that exceeded BP’s expectations. I would not hesitate to recommend Sodexho to any organizations requiring the same services in remote locations.”

Andrew J. Vincent, Drilling Team Consultant, BP Indonesia, Jakarta.Tangguh LNG Development Project.

In record time, within budget, to standardBP confirmed its appreciation of Sodexho’s professionalism over the years by awarding it the challenging contract for a turnkey camp at Tangguh Papua to support the company’s offshore drilling program. Today BP has nothing but praise for Sodexho’s successful project management.

Rigorous specifi cations for a camp in the jungleBP had to install a camp in a coastal jungle located 300 km from the nearest town to accommodate 150 people. They needed a partner capable of overseeing the entire operation and meeting considerable challenges: a strict budget, extremely high Health, Safety and Environment standards and a deadline determined by the fi xed arrival date of the drilling rig.

Maximum mobilization with local partnersSodexho brought the highest standards to project planning, engineering and the materials approval process. It called upon a specialized camp builder and a reliable shipper, subcontracted site works to local fi rms, obtained crucial regulatory certifi cations and set up a supply chain to handle overall camp management.

Quality of Life ahead of scheduleThe Tangguh Papua camp was completed to specifi cation in March 2007, four weeks ahead of schedule. Since the handover, the Sodexho team has been offering varied services to ensure the comfort and safety of more than 150 people, responding to the camp’s operational requirements with the quality BP has come to expect.



Sodexho Experience

Sakhalin Island – RussiaCTSD secures its remote site with SOKeez

The Prigorodnoe LNG plant on Sakhalin Island operates in temperatures down to -30°C during the winter. To reinforce security and simplify management on the 6,000-man camp, Sodexho rolled out the SOKeez Access Control system. SOKeez is a multi-application smart card solution with which the Client manages access rights, creates ID cards, performs real-time security checks, tracks meals and the use of various camp services, stores personnel information to establish statistics and measures working hours without accidents. For CTSD, SOKeez is easy to use and requires little maintenance. Designed to work under extreme conditions, it is suited to the demands of remote sites.


Oil and GasAP Moller-Maersk Group, Congo.BP, Argentina, USA (Alaska and Gulf of Mexico), Indonesia, Norway, Netherlands, United Kingdom, Russia.ConocoPhillips, USA (Alaska, on-shore) and Gulf of Mexico (offshore), United Kingdom.ExxonMobil, Saudi Arabia, Australia, Canada, USA (on-shore) and Gulf of Mexico (offshore), Norway, Netherlands, Venezuela.Noble Drilling, Denmark, United Arab Emirates, Gulf of Mexico, Qatar, United Kingdom.Qatargas, Qatar.Saudi Aramco, Saudi Arabia.Shell, Gabon, Gulf of Mexico, Nigeria, Netherlands, Russia, Sultanate of Oman, Venezuela.Sinopec, Saudi Arabia.Total, Angola, Cameroon, Congo, Gabon, Gulf of Mexico, Nigeria, Norway, Netherlands, Qatar.Transocean, Inc., Gulf of Mexico, India, Nigeria, Norway, Thailand, Vietnam.

MiningAlcan, Inc., Australia.BHP Billiton, Australia, Canada, Peru.Barrick Gold, Australia, Canada, Peru, Tanzania.INCO, Australia, USA (Alaska), New Caledonia.Pan Australian Resources (PAR), Laos.Phu Bia, Laos.Rio Tinto, Australia, Madagascar, Peru.

Engineering and ConstructionBechtel, Qatar.Chiyoda, Russia, Qatar.Fluor Daniel, Saudi Arabia, Peru, Qatar.SNC Lavalin, New Caledonia, Venezuela.




Inventing a simpler life for everyoneSodexho’s innovative, fl exible, secured solutions ensure added value for businesses and local authorities, making it a benchmark in its markets. Through a wide range of easy-to-use vouchers, magnetic cards and smart cards with embedded chips, contactless or electronic accounts, Sodexho is inventing a simpler, more pleasant life in the workplace and in society.

447447 591591 3%3% 3,348348 310,000310,000Revenues in EUR millions Revenues in USD millions Share of Group revenues Employees Clients1

Source: Sodexho

AchievementsAcquisition of Tir Groupé, the French leader in gift voucher issue volume and Vivaboxes, a Belgian gift box specialist, thereby expanding Sodexho’s global presence in the gift voucher market.

Launch of Gift Pass and Premium Pass in Brazil and Indonesia, Shopping Pass in United Kingdom, Meal Card in Spain, the Motivation offer in Romania, Flexi Pass in Slovakia and Solidarity Card in Turkey.

ArgentinaSodexho was ranked “Voucher Issuer of the Year” in a B-to-B rating conducted by the business magazine Revista Mercado.

France Sodexho received the “Public-Private Action Award” for its CLARC service, a culture checkbook issued to students in the Centre Region.

The City of Marseilles chose Sodexho to manage meal vouchers for its 9,500 employees at 250 sites.

•

•

LuxembourgThe national convention of Human Resources Managers gave Sodexho the prize for “2006 Best Incentive and Motivation Solutions”.

SpainCaixa Foundation, the world’s eighth largest private foundation, awarded Sodexho an Assistance Contract for its anti-poverty program for children under age 16. The 4-year contract will touch 100,000 families.

United KingdomSodexho won the “Childcare Voucher Provider of the Year” prize awarded by Employee Rewards and Benefits magazine.

No.2 worldwide

Issue volume: 7.5 billion euro

(1) Excluding individuals



Market trendsSeveral factors are infl uencing this market:

Rapid growth in countries such as India, Argentina, Brazil and Venezuela is generating significant development opportunities.

Employee motivation and retention problems are also beginning to affect Small and Medium-sized Enterprises, which are calling for solutions adapted to their organizations to help their employees achieve a better balance between career demands and home life.

At the same time, governments and local authorities are seeking a specialized service provider to manage and monitor their social aid programs. They expect aid traceability and the shortest possible delay between the decision to allocate funds and their actual distribution to target populations.

Source: Sodexho

Market fi gures

Over 70 billion euro global issue volume in the market

20.2 million beneficiaries

15.5 million employees

enjoy Daily Life solutions.

3.6 million employees use Motivation

and Loyalty solutions.

1.1 million citizens benefi t from

public aid through Sodexho solutions.

1 million Sodexho affiliated partners

Source: Sodexho

•

•

•

Oracle-Sodexho (India)

Experience makes the differenceOracle software development operations in India employ more than 12,000 people at 21 sites throughout the country. When the company’s meal coupon system became unwieldy, Oracle chose Sodexho’s Smart Card, the No.1 turnkey solution in the Indian market.

From a complex system with built-in restrictions…Oracle’s policy was to issue employees a monthly booklet of paper coupons to pay for their meals at the company cafeteria. This manual system was unwieldy and diffi cult to manage. Meal choices were limited by the fi xed coupon value and the coupons were valid only at the on-site restaurant. To support its human resources expansion and increase the meal options of staff members, Oracle sought a reliable, fl exible solution for use at all its sites.

… to the solution for today and tomorrowSodexho, the leading Restaurant Card service provider in India, proposed to develop and test a customized solution. The team analyzed the company’s workplace methods and constraints and designed a Smart Card with an embedded chip. For Oracle, the new system has proved to be effi cient and simple to operate, while ensuring freedom of choice and quick, easy payment for users. In less than six months, the company and its employees have made the transition to the Smart Card, which not only satisfi es their expectations today, but can be adapted to meet the needs of tomorrow.

12,000 users on 21 sites



Sodexho Experience

FranceSynergies in “gift vouchers” with Tir Groupé

In October 2007 Sodexho fi nalized the acqui sition of “Tir Groupé”, a pioneer and France’s leading issuer of gift vouchers to businesses and local communities, an alliance offering promising prospects for both parties. Tir Groupé will accelerate its growth through access to Sodexho’s client portfolio. Sodexho will strengthen its international presence by entering this high-potential French market segment. The takeover will also open up a new distribution channel for Sodexho’s Meal Vouchers.

Tir Groupé

35,000 clients

200 employees

7 regional agencies

325 French trade names (5,000 local stores and 180 e-commerce websites).


Banks – InsuranceBNP Paribas, Austria, Chile, Czech Republic, Germany, Poland, Spain, Tunisia, Turkey.Citigroup, Belgium, Chile, Colombia, Czech Republic, Philippines, Slovakia, Spain.ING Group, Chile, Czech Republic, Poland, Slovakia, Spain.Société Générale, Czech Republic, Mexico, Poland, Spain.

IT-ElectronicsHewlett-Packard, Belgium, Colombia, Czech Republic, India, Philippines, Poland, Turkey.Microsoft, Colombia, Czech Republic, India, Philippines, Poland, Slovakia, Venezuela.Samsung Electronics, Argentina, Colombia, Czech Republic, Germany, Mexico, Peru, Philippines, Poland, Slovakia.

Consumer goodsCoca-Cola, Austria, Belgium, Czech Republic, Hungary, Luxembourg, Philippines, Poland, Slovakia.Nokia, Austria, Chile, Colombia, Hungary, Peru, Philippines, Poland, Turkey, Venezuela.Unilever, Argentina, Belgium, Chile, Czech Republic, Hungary, Philippines, Poland, Slovakia, Spain.

Industry - EnergyExxon Mobil, Austria, Colombia, Czech Republic, Hungary, Tunisia.Merck, Austria, China, Colombia, Czech Republic, Mexico, Philippines, Poland, Turkey.Michelin, Belgium, Czech Republic, Hungary, Philippines, Poland, Slovakia, Turkey.Renault Group, Argentina, Austria, Belgium, Colombia, Czech Republic, Luxembourg, Mexico, Poland.Sanofi-Aventis, Austria, Belgium, Chile, Colombia, Czech Republic, Mexico, Philippines.Siemens, Austria, Chile, Colombia, Czech Republic, France, Germany, Hungary, Philippines, Poland, Slovakia, Tunisia, Turkey.

Public servicesNational Postal Services, La Poste (Belgium), La Poste (France), Magyar Posta Rt. (Hungary), Poczta Polska (Poland).National Railways Services, MÁV (Hungary), SNCB (Belgium).Public Authorities, Banco de Brasilia (Brazil), Communidad de Madrid, Generalitat de Cataluña, (Spain), Her Majesty’s Government (UK), Steel Authority of India (India).


2. Corporate Governance

Corporate Governance 54

Description of the Group 54

The Board of Directors 56

1. Members of the Board of Directors as of August 31, 2007 562. Information about members of the Board of Directors 573. Directors’ compensation 634. Compliance with corporate governance rules 645. Chairman’s Report on the Operating Procedures of the Board

of Directors and on Internal Control Procedures 66 Auditors’ report 756. Risk Management 767. Audit fees 79

Executive Committee 80

1. Chief Executive Offi cer 802. Executive Compensation for Fiscal 2007 813. Stock Option Policy 82


2. Corporate Governance

Corporate Governance

Sodexho respects the principles of strong corporate governance, and has taken into account the recommendations of the Viénot and Bouton reports. The Board of Directors comprises 14 members. Ten are French nationals, two are American, one is Canadian and one British. Six directors qualify as independent in accordance with accepted corporate governance criteria.

DESCRIPTION OF THE GROUPD

ActivitiesSodexho Alliance has two core activities: Food and Facilities Management services and Service Vouchers and Cards.

The Food and Facilities Management services activity operates in the following geographic areas:

North America;

Continental Europe;

United Kingdom and Ireland;

Rest of the World (including South America, Asia/Pacific, Africa and the worldwide Remote Site Management segment).

The Group’s business units consist of the Service Vouchers and Cards activity and the individual geographic areas within the Food and Facilities Management services activity.

••••

OrganizationSodexho Alliance is administered by a Board of Directors, chaired by Pierre Bellon.

On September 1, 2005 the roles of Chairman of the Board of Directors and Chief Executive Offi cer were separated, and Michel Landel succeeded Pierre Bellon as Chief Executive Offi cer of Sodexho Alliance. The Internal Rules of the Board of Directors defi ned their respective roles as follows:

role of the Chairman of the Board of Directors :

The Chairman of the Board of Directors represents the Board of Directors, and organizes and directs their work, for which he is accountable to the general shareholders’ meeting. He ensures that the company’s administrative bodies are functioning properly, and in particular ensures that the directors are capable of fulfi lling their remit.

•


Corporate Governance 2. role of the Chief Executive Officer:

The Chief Executive Offi cer has the authority to manage the operations and functions of the Group. Limits are placed on the powers of the Chief Executive Offi cer; these limits are set by the Board of Directors, based on recommendations from the Chairman of the Board. The Chief Executive Offi cer must obtain the prior consent of the Board to pledge corporate assets as collateral or to bind the company beyond specifi c limits as regards investments, disposals or borrowings. The Chief Executive Offi cer must also obtain the prior consent of the Board for decisions relating to the start-up of new operations. These limits are not enforceable against third parties, as the Chief Executive Offi cer has the broadest powers to bind the company in its dealings with third parties.

In his role as Chief Executive Offi cer, Michel Landel is supported by an Executive Committee with ten members. The Committee includes the four Chief Operating Offi cers responsible for each of the Group’s business units, together with the Group’s senior executives in charge of Strategic Planning and Innovation, Marketing, Finance,

• Human Resources, and Communications and Sustainable Development. The Executive Committee meets once a month, and is the linchpin of the management structure. It is responsible not only for discussing and developing strategies to be recommended to the Board of Directors, but also for monitoring implementation of these strategies once they have been approved by the Board. The Executive Committee tracks implementation of action plans, monitors business unit performance, and assesses the potential benefi ts and risks of growth opportunities.

There is also an Operational Committee, consisting of the Executive Committee members plus the Group’s principal operating and functional managers, which meets at least twice a year.

Its role is:

to share a common vision;

to assess the risks and opportunities facing the Group at the global level;

to mobilize around the Group’s major strategic imperatives;

to improve information fl ows.

••

••


2. Corporate GovernanceThe Board of Directors

The Board of Directors

The rules and operating procedures of the Board of Directors are defi ned by the law, the company’s by-laws and the Internal Rules of the Board. In addition, committees have been established in accordance with these rules (see the Chairman’s Report).The company’s by-laws contain few specifi c provisions relating to directors over and above the standard legal requirements, other than provisions concerning the term of offi ce and age limit of directors, and the number of shares each director is required to own.

1. MEMBERS OF THE BOARD OF DIRECTORS AS OF AUGUST 31, 2007

First Elected Term Expires

Pierre Bellon Chairman Nov 14, 1974 2010

Rémi Baudin Vice-Chairman Feb 25, 1983 2010

Robert Baconnier* President, ANSA Feb 08, 2005 2008**

Patricia Bellinger* Company Director Feb 08, 2005 2008**

Astrid BellonMember of the Management Board, Bellon SA Jul 26, 1989 2010

Bernard BellonChairman of the Board of Directors, Finadvance Feb 26, 1975 2009

François-Xavier Bellon CEO of Bright Yellow Group PIc Jul 26, 1989 2010

Sophie ClamensChairman of the Management Board, Bellon SA Jul 26, 1989 2010

Paul Jeanbart* Chief Executive Offi cer, Rolaco Feb 13,1996 2008**

Charles MilhaudChairman of the Management Board, CNCE Feb 4, 2003 2009

François Périgot*Honorary President, MEDEF International Feb 13, 1996 2008**

Nathalie SzaboMember of the Management Board, Bellon SA Jul 26, 1989 2010

Peter Thompson* Company Director Feb 08, 2005 2008**

Mark Tompkins* Company Director Feb 05, 2002 2008**

* Independent Director** The Board of Directors will propose the renewal of these mandates for three years to the shareholders at the meeting of January 22, 2008.


Corporate Governance 2.The Board of Directors

2. INFORMATION ABOUT MEMBERS OF THE BOARD OF DIRECTORS

Pierre BellonBorn January 24, 1930.Married, 4 children.Graduate of the Ecole des Hautes Etudes Commerciales (HEC).Nationality: French.

Business address:Sodexho Alliance3, Avenue Newton – 78180 – Montigny-le-Bretonneux, France.

BackgroundPierre Bellon joined Société d’Exploitations Hôtelières, Aériennes, Maritimes et Terrestres in 1958 as Assistant Manager. He later served as Managing Director and then Chairman and Chief Executive Offi cer.

In 1966, he founded Sodexho SA, which became Sodexho Alliance SA in 1997. He served as Chairman and Chief Executive Officer until August 31, 2005, when he was replaced as Chief Executive Officer by Michel Landel. Pierre Bellon remained as Chairman of the Board of Directors, a position he still holds.

From 1988, he served as Chairman and Chief Executive Officer of Bellon SA, the family holding company that controls Sodexho Alliance; he also served as Chairman of the Management Board of Bellon SA from 1996 to 2002. He has been Chairman of the Supervisory Board of Bellon SA since February 2002.

Since 1976, he has been a member of the Executive Council of CNPF, the French employers’ federation, now known as MEDEF.

Pierre Bellon has also served as:Vice-President of CNPF (subsequently MEDEF), 1980-2005;National President of the French National Center for Young Business Leaders (formerly the Center for Young Employers), 1968-1970;President of the French National Federation of Hotel and Restaurant Chains, 1972-1975;Member of the French Economic and Social Council, 1969-1979.

Other corporate offi ces held Bellon SA (Chairman of the Supervisory Board); PPR (Member of the Board of Directors); CMA CGM (Member of the Supervisory Board); Sobelnat SCA (Member of the Supervisory Board); He also serves as a Director of various Sodexho Group companies.

Other positions President/founder of the French Management Improvement Association (APM); Board Member of the French National Association of Joint Stock Companies (ANSA);

Number of Sodexho Alliance shares held: 12,900.

•

•

•

•

•••••

•

•

Other corporate offi ces held within the past fi ve years but no longer held

L’Air Liquide (Member of the Supervisory Board).

Robert BaconnierBorn April 15, 1940 in Lyon (France).Married, 3 children.Degree in Literature, Graduate of the Institute d’Etudes Politiques de Paris and of the Ecole Nationale d’Administration (1965-1967).Nationality: French.

Business address:ANSA39, rue de Prony – 75017 – Paris, France.

BackgroundRobert Baconnier began his career in 1967 as a civil servant at the French Ministry of Economy and Finance, and was assigned to the Internal Revenue Service (Direction Générale des Impôts). From 1977 to 1979 he was Technical Advisor to the office of the Minister of Economy and Finance, then Deputy Director in the offi ce of the Minister for the Budget. From 1979 to 1983 he was Deputy Director in charge of the International Division of the Tax Legislation Department; in 1983, he was appointed head of the Litigation Department of the Internal Revenue Service. In 1986 he became head of the Internal Revenue Service. From 1990 to 1991 he was Paymaster General at the French Treasury.

In 1991, he joined the law fi rm Bureau Francis Lefebvre, where he served as Chairman of the Management Board until 2004.

He is currently Chairman and COO of ANSA, the French National Association of Joint Stock Companies.

Other corporate offi ces held Member of the Board of Directors, Lafarge Ciments;

Member of the Supervisory Board, ELS (Editions Lefebvre Sarrut).

Other positions Non-Voting Observer and member of Audit Committee, Siparex Associés;

Member of the Conseil des Prélèvements Obligatoires (the French Tax and Social Charges Board).

Number of Sodexho Alliance shares held: 410.


Chairman of the Tax Committee of MEDEF, the French employers’ federation.

•

••

•

•

•



Rémi BaudinBorn October 19, 1930.Married, 4 children.Graduate of the Ecole des Hautes Etudes Commerciales (HEC).Nationality: French.

Business address:Sodexho Alliance3, avenue Newton – 78180 – Montigny-le-Bretonneux, France.

BackgroundBefore helping Pierre Bellon to create Sodexho, Rémi Baudin took part in a number of foreign projects for management consultancy SEMA, from 1957 to 1965.

He reorganized and managed the ship chandlery business (1965-1969), then set up a joint venture with Sonatrach in remote site management and headed the joint venture in Algeria (1969-1970). He successively managed the Food Services France division, starting up operations in Belgium (1971-1976); the France and Africa division, overseeing start-ups in Cameroon, Nigeria, Ivory Coast, Angola, Benin, Equatorial Guinea, Algeria and Libya (1977-1982); and the Food Services France and Europe division (1982-1992). In 1996 he was appointed Chairman of the Supervisory Board of Bellon SA, becoming its Vice-Chairman in 2002.

Other corporate offi ces held Bellon SA (Vice-Chairman of the Supervisory Board);

Octofinances SA (Chairman of the Supervisory Board).

Other positions President and founder of FERCO, the European Food Services Confederation.


Other corporate offi ces held within the past fi ve years but no longer heldNone.

Patricia BellingerBorn March 24, 1961 in Connecticut (USA).Married, 2 children.BA in Literature, Harvard University.Nationality: Dual American and British.

Business address:Sodexho Alliance3, avenue Newton – 78180 - Montigny le Bretonneux, France.

••

•

BackgroundPatricia Bellinger began her career in Madrid, Spain in 1986 by founding a casting agency, and she continued to work in media and communications in Spain until 1995. In 1995, she returned to the USA and joined Bristol Myers Squibb (BMS), the pharmaceutical company, where she was successively Associate Director for Communications and Associate Director for Public Affairs. In 1998 she became the Corporate Director of Culture and Human Resources Diversity. In 2000, she joined British Petroleum in London as head of diversity and inclusion; she was Group Vice President and Director of the BP Leadership Academy until 2007.

Other positions Member of the Executive Leadership Council (Washington DC);

Member of the Breakthrough Breast Cancer Generations Appeal Board (UK);

Member of the Global Diversity Advisory Board, Organizational Resources Council (ORC) Worldwide.



Member of the Advisory Board of the Leadership Center at Morehouse College (Atlanta, US).

Astrid BellonBorn April 16, 1969.Graduate of ESLSCA.Master of Arts in Cinema Studies, New York City.Nationality: French.

Business address:Bellon SA3, avenue Newton – 78180 – Montigny-le-Bretonneux, France.

BackgroundAstrid Bellon is a member of the Management Board of Bellon SA.

Other corporate offi ces held Bellon SA (Member of the Management Board);

Sofrane SAS (Chairman);

Sobelnat SCA (Permanent Representative of Sofrane SAS, Managing Partner).



•

•

•

•

•••



Bernard BellonBorn August 11, 1935.Married, 5 children.Degree in French Literature from IAE Aix – Marseille.Nationality: French.

Business address:14, rue Saint Jean – 1260 – Nyon, Switzerland.

BackgroundBernard Bellon was Director of Compagnie Hôtelière du Midi (part of the Compagnie de Navigation Mixte Group) from 1962 to 1970 and then held various managerial positions in banking at CIC-Banque de l’Union Européenne Group from 1970 to 1988. He founded Finadvance SA, a venture capital company of which he has been Chairman since its creation in 1988.

Other corporate offi ces heldBellon SA (Member of the Supervisory Board);

Finadvance SA (Chairman of the Board of Directors);

Copelia (Director).



Perfi n SA (Executive Director);

Jefco (Director);

Allios Industries (Director);

CIC France (Non-Voting Observer).

François-Xavier BellonBorn September 10, 1965.Married, 4 children.Graduate of the European Business School.Nationality: French.

Business address:Bright Yellow Group Plc20-22 Richfi eld AvenueReading, Berkshire RG1 8EQ (United Kingdom).

BackgroundFrançois-Xavier Bellon began his career in the temporary employment industry as an agency manager for Adia France (1990-1991), then for Ecco in Barcelona, Spain (1992-1995), where he was promoted to Sales and Marketing Director and Regional Director for Catalonia (1993-1995).

He joined the Sodexho Group in September 1995 as Regional Manager, subsequently becoming Development Manager in the Health Care segment in France. In 1999, he became the Managing Director of Sodexho in Mexico. In January 2004, he was appointed Chief Executive of Sodexho in the UK, before resigning a few months later. From December 2004 to December 2006, he was appointed

•••

••••

as Sales and Marketing Director of the Temporary Work Division of the Adecco Group. In August 2007, he formed his own company, and subsequently acquired Bright Yellow Group Plc, a small British company providing home assistance for seniors.

Other corporate offi ces heldBellon SA (Member of the Management Board);

Bright Yellow Group Plc (Chief Executive);

Footprint Ltd (Director).

Other positionsAdvisor, French Foreign Trade Commission.



Sophie ClamensBorn August 19, 1961.Married, 4 children.Graduate of the Ecole des Hautes Etudes Commerciales du Nord (EDHEC).Nationality: French.

Business address:Sodexho Alliance3, avenue Newton – 78180 – Montigny-le-Bretonneux, France.

BackgroundSophie Clamens began her career in 1985 with Crédit Lyonnais in New York as a mergers and acquisitions advisor for the bank’s French clientele. She joined the Sodexho Group Finance Department in 1994 as a senior analyst. In 2001, she was appointed Project Manager – Strategic Financial Planning within the Group Strategic Planning Department, to develop and implement key performance indicators. In addition to this role, she worked on the identifi cation and dissemination of best practices, and rolled out the worldwide client retention strategy. Since September 2005, she has been dedicated to this latter role on a full-time basis as Group Vice-President Client Retention.

Other corporate offi ces held Bellon SA (Chairman of the Management Board since 2002);

Holding Altys SA (Director);

Baumira SARL (Offi cer).



•••

•

•

••



Paul JeanbartBorn August 23, 1939.Married, 3 children.Civil engineer.Nationality: Canadian.

Business address:Rolaco Holding SA28, boulevard du Pont d’Arve – 1205 – Geneva, Switzerland.

BackgroundCo-founder, partner and Chief Executive Offi cer of the Rolaco group since 1967.

Other corporate offi ces held Oryx Finance Limited, Grand Cayman (Chairman);

Hôtels Intercontinental Genève, Switzerland (Chairman of the Board of Directors);

Rolaco Holding SA, Luxembourg (Executive Director) and subsidiaries/affi liates of the Rolaco Group (Member of the Board of Directors);

Semiramis Hotel Co., Egypt (Member of the Board of Directors);

Luxury Brand Development SA, Luxembourg (Chairman of the Board of Directors);

Club Méditerranée SA, France (Member of the Supervisory Board).



XL Capital Ltd (Member of the Board of Directors);

Orfèvrerie Christofl e SA (Member of the Supervisory Board);

Delta International Bank (Member of the Board of Directors);

Nasco Insurance Group (Member of the Board of Directors).

Charles MilhaudBorn February 20, 1943.Married, 2 children.Advanced degree in Mathematics, Physics and Chemistry.French.

Business address:CNCE (Caisse d’Epargne Group)50, avenue Pierre Mendès France – 75201 – Paris Cedex 13, France.

BackgroundIn 1964, Charles Milhaud joined the Caisse d’Epargne, where in 1983 he became Chief Executive Offi cer of the

••

•

•

•

•

••

•

•

Bouches-du-Rhône and Corsica regions and a member of the Supervisory Board of the Centre National des Caisses d’Epargne (CNCEP). In 1995, he became Vice-Chairman of the Board of Directors of Caisse Centrale des Caisses d’Epargne. In 1999, after the merger of these two institutions, Charles Milhaud was appointed Chairman of the Management Board of Caisse Nationale des Caisses d’Epargne (CNCE).

Other corporate offi ces held Financiére Océor (Chairman of the Supervisory Board);

CNP Assurances (Member of the Supervisory Board);

Banque de Tahiti (Permanent representative of CNCE - Director);

Banque de Nouvelle-Calédonie (Permanent representative of CNCE - Director);

Sopassure (Director);

SAS Erixel (Chairman);

Sogima (Director via his chairmanship of GCE Participations, permanent representative);

Centre National d’Enseignement à Distance (Chairman of the Board of Directors);

Banque des Mascareignes (Director);

SCA Veolia Eau – Compagnie Générale des Eaux (Member of the Supervisory Board);

SAS GCE Maroc (Chairman of the Board of Directors);

Massira Capital Management (Director);

SAS GCE Participations (Permanent representative of CNCE – Chairman);

SAS IDF Tele (Member of the Supervisory Board);

Natixis (Chairman of the Supervisory Board);

Credit Immobilier et Hôtelier (Vice-Chairman of the Supervisory Board);

Coface (Director);

Europacorp (Member of the Supervisory Board);

GCE Domaines (Chairman of the Board of Directors);

Nexity (Vice-Chairman of the Board of Directors).

Other positions Groupement Européen des Caisses d’Epargne (Vice-Chairman);

Fédération Bancaire Française (Member of Executive Committee);

Groupement National de la Coopération (Member of the Board of Directors);

Fondation Belem (Treasurer);

Fondation Caisses d’Epargne pour la Solidarité (Chairman).



Caisse des Dépôts Développement (Director);

•

••

•

•••

•

••

•••

•••

••••

•

•

•

••

•



Cetelem (Member of the Supervisory Board);

Ecureuil Participations (Director);

Société Nouvelle d’Exploitation de la Tour Eiffel (Director);

Université René Descartes (Paris V) (Director);

SICP (Chairman of the Board of Directors);

CDC Finance-CDC Ixis (Vice-Chairman of the Supervisory Board);

Université du Groupe Caisse d’Epargne (Chairman);

GCE Immobilier (Vice-Chairman of the Supervisory Board);

Perexia (Vice-Chairman of the Supervisory Board);

Ixis Corporate & Investment Bank (Member of the Supervisory Board);

Ixis Asset Management Group (Member of the Supervisory Board);

Natixis Global Asset Management (Member of the Supervisory Board);

Crédit Foncier de France (Chairman of the Supervisory Board);

CDC Entreprise (Member of the Supervisory Board);

GCE Habitat (Member of the Supervisory Board);

Issoria (Chairman of the Supervisory Board);

Banque de la Réunion (Permanent representative of CNCE - Director).

François PérigotBorn May 12, 1926.Married.Advanced degree in Law, graduate of the Institut d’Etudes Politiques de Paris.Nationality: French.

Business address:MEDEF International9, avenue Frédéric Le Play – 75007 – Paris, France.

BackgroundAfter serving as Chairman and Chief Executive Offi cer of Thibaud Gibbs et Compagnie from 1968 to 1970, François Périgot successively held the positions of Chairman and Chief Executive Offi cer of Unilever Spain and Chairman and Chief Executive Offi cer of Unilever France (1971-1986).

From 1986 to 1998, he was Chairman of Compagnie du Plâtre, and from 1988 to 1998 he served as Vice-Chairman, and later Chairman, of UNICE, the European union of employer and industry confederations. François Périgot has also been:

Chairman of the French Enterprise Institute (1983-1986);

Chairman of the CNPF, the French employers’ federation (1986-1994);

Member of the Executive Committee of the International Chamber of Commerce (1987-1989);

•••

•••

••

••

•

•

•

••••

••

•

Member of the French Economic and Social Council (1989-1999);

Chairman of MEDEF International (1997-2005);

Chairman of the Franco-Dutch Chamber of Commerce (1996-2002);

President of the International Organization of Employers (2001-2006).

He has been Honorary President of MEDEF and MEDEF International since 2005.

Other corporate offi ces held OENEO (Director).



Marine Wendel (Director);

Astra Calvé (Director);

Lever (Director);

CDC Participations (Director);

Radoux (Director);

Unilever France Holdings (Director).

Nathalie SzaboBorn January 26, 1964.Married, 3 children and legal guardian for 2 nephews.Graduate of the European Business School.Nationality: French.

Business address:Sodexho Prestige- L’Affi che19, rue de Sèvres – 92100 – Boulogne, France.

BackgroundNathalie Szabo began her career in the Food Services industry in 1987. From 1989, she was an account manager for Scott Traiteur, and then Sales Manager of “Le Pavillon Royal”.

She joined Sodexho in March 1996 as Sales Director for Sodexho Prestige in France, becoming a Regional Manager in 1999. In September 2003 she was appointed Managing Director of Sodexho Prestige, and was also appointed as Managing Director of L’Affi che in January 2006.

Other corporate offi ces held Bellon SA (Member of the Management Board);

SEGSHMI – Société du Lido (Member of the Supervisory Board).



•

••

•

•

••••••

••



Peter ThompsonBorn September 15, 1946 in Melbourne (Australia).Married, 3 children.BA Modern Languages, Oxford University; MBA, Columbia University.Nationality: American.

Business address:Thompson Holdings LLC11 Broad RoadGreenwich, CT 06830, United States.

BackgroundPeter Thompson began his career in marketing in 1970. In 1974, he became a Product Manager at General Foods Corp. He joined GrandMet Plc in 1984, where he held management positions (Green Giant, Häagen-Dazs, Pillsbury, etc.). In 1992 he became Chairman and CEO of GrandMet Foods Europe, based in Paris. In 1994 he joined the PepsiCo Group where he successively held the following positions: Chairman of Walkers Crisps in the UK; CEO Europe, Middle East, Africa of Frito-Lay International; and fi nally CEO of Pepsi-Cola International (1996-2004).

Currently, he is a private investor and a Director of Syngenta AG.

Other corporate offi ces held Syngenta AG (Director and Member of the Audit Committee).



Pepsi-Cola International (Chief Executive Officer) – United States;

Pepsi Gemex SA de CV (Director) – Mexico;

Stanwich School (Chairman of the Board of Trustees) – United States.

•

•

••

H. J. Mark TompkinsBorn November 2, 1940.Married, 3 children.Masters degree in Natural Sciences and Economics from the University of Cambridge; MBA from the Institut Européen d’Administration des Affaires (INSEAD).Nationality: British.

Business address:Thurloe Capital Partners Ltd15 Cromwell Road, London SW7, United Kingdom.

BackgroundMark Tompkins began his career in investment banking in 1964 with Samuel Montagu & Company (now HSBC). From 1965 to 1971, he was a management consultant with Booz Allen & Hamilton working on assignments in the UK, continental Europe and the USA. He joined the Slater Walker Securities group in 1972 and was named Chairman and Chief Executive Officer of Compagnie Financière Haussmann, a publicly traded company in France. From 1975 through 1987, he was active in residential and commercial property investment in the Middle East, Germany, Spain, France and the United States. In 1987 and subsequent years, his focus moved to private equity and development capital in publicly traded entities, notably in the healthcare, biopharmaceutical, tourism and leisure, and manufacturing sectors.

Other corporate offi ces heldMark Tompkins is also on the Board of Directors of:

Allied Healthcare International, Inc. (United States);

Healthcare Enterprise Group Plc (United Kingdom);

Kingkaroo (Pty) Ltd (South Africa);

Samara Private Game Reserve (Pty) Ltd (South Africa).



Original Investments Ltd (Member of the Board of Directors);

Baobaz SA (Member of the Board of Directors);

Partners Holdings Plc (Member of the Board of Directors);

Calcitech Ltd (Member of the Board of Directors).

••••

•

••

•



3. DIRECTORS’ COMPENSATION

Directors’ feesDirectors’ fees were calculated and paid in accordance with the Board’s Internal Rules, based on the following criteria:

16,000 euro fi xed fee to each Director;

1,600 euro per attendance at Board meetings;

••

5,000 euro fixed fee to each member of a Board Committee;

700 euro per attendance at Committee meetings.

The total amount of directors’ fees paid for fi scal 2007 was 455,200 euro, out of the maximum of 472,500 euro authorized by the general shareholders’ meeting of January 30, 2007.

•

•

Compensation and other benefi ts paid to members of the Board of Directors (in compliance with article L. 225-102-1 of the French Commercial Code)

(in euro)

Total Total Sodexho Alliance Bellon SA(2)

Fiscal 2006(1) Fiscal 2007(1) Directors’ fees

Pierre Bellon 272,703(3) 240,000(3) 40,000 200,000

Robert Baconnier 29,900 40,000 40,000

Rémi Baudin 40,900 44,100 42,100 2,000

Patricia Bellinger 34,000 39,300 39,300

Astrid Bellon 94,296 95,896 25,600 70,296

Bernard Bellon 32,300 35,600 33,600 2,000

François-Xavier Bellon 92,796 97,496 27,200 70,296

Sophie Clamens 202,673 216,208 30,000 101,776

Paul Jeanbart 21,000 25,600 25,600

Charles Milhaud 16,500 19,200 19,200

François Périgot 36,100 40,700 40,700

Nathalie Szabo 181,203 189,020 32,900 81,628

Peter Thompson 24,000 25,600 25,600

Mark Tompkins 28,700 33,400 33,400

(1) Total including directors’ fees paid by Sodexho Alliance and all forms of compensation paid for positions held in Bellon SA, Sodexho Alliance, and/or Sodexho Group companies.

(2) All forms of compensation paid for positions held in Bellon SA.(3) Pierre Bellon receives no compensation for his position as Chairman of the Board of Sodexho Alliance, but has the use of a company car, an office

and an assistant.



4. COMPLIANCE WITH CORPORATE GOVERNANCE RULES

The shares of Sodexho Alliance stock were listed on the New York Stock Exchange until July 16, 2007. As a result of Sodexho Alliance having been listed on two different stock exchanges until July 16, 2007, the Group’s corporate governance structure includes the mandatory provisions of French corporate governance law and the securities laws and regulations of both France and the US, as well as the rules promulgated by the stock market authorities in both countries. The Group therefore believes that it has an appropriate corporate governance structure that refl ects current best practice in France and in the US.

Family relationships between members of the Board of Directors and of the Senior Management are as follows:

Astrid Bellon, Sophie Clamens, Nathalie Szabo and François-Xavier Bellon (Directors) are the children of Pierre Bellon, Chairman of the Board of Directors;

Bernard Bellon (Director) is the brother of Pierre Bellon.

There are no other family relationships between members of the Board of Directors and members of the Executive Committee of Sodexho Alliance.

No loans or guarantees have been made or given to either members of the Board of Directors or Senior Management by Sodexho Alliance or by any Group company.

No assets necessary for the Group’s operations are owned by either members of the Board of Directors or Senior Management or by their families.

There are no potential confl icts of interest between the duties to Sodexho Alliance of members of the Board of Directors or Senior Management and their private interests. In particular:

Pierre Bellon and his children control 68.5% of Bellon SA, which holds 36.83% of the share capital of Sodexho Alliance;

•

•

•

Bernard Bellon, with other members of his family, holds 13% of the shares of Bellon SA;

Charles Milhaud is Chairman of the Management Board of CNCE, which in June 2004 granted Bellon SA, the parent company of Sodexho Alliance, a €413 million loan repayable in July 2012. This loan cancelled and replaced the €400 million bond issue subscribed in May 2001. In addition, the Sodexho Group has signed framework agreements with the Fondation Caisses d’Epargne in France relating to the management of approximately fi fty sites.

During fi scal 2007, Sodexho Alliance was not notifi ed of the acquisition of Sodexho Alliance shares by any director.

As far as we are aware, no member of the Board of Directors or of the senior management has during the past fi ve years been:

convicted of fraud;

associated with a bankruptcy, receivership or liquidation;

offi cially incriminated and/or subject to any offi cial public sanction issued by a statutory or regulatory authority.

Also as far as we are aware, no member of the Board of Directors or of the Senior Management has been disqualifi ed by a court from acting as a member of the administrative, management or supervisory bodies of a publicly-traded company or from participating in the management or conduct of the affairs of a publicly-traded company during the past fi ve years.

•

•

•••



Controlling shareholder measuresIn the interests of transparency and disclosure, Sodexho Alliance has put in place a series of measures inspired by the recommendations of the October 2003 AFEP-MEDEF report on corporate governance for listed companies, and by applicable rules issued by the Securities and Exchange Commission in the United States.

Examples of these measures include:

the independent status of six of the fourteen members of the Board of Directors;

the existence of three Board committees, two of which (the Nominating Committee and the Compensation Committee) include independent directors, and the third of which (the Audit Committee) is composed entirely of independent directors;

the separation of the roles of Chairman of the Board and Chief Executive Offi cer. On September 1, 2005, Michel Landel – neither a member of Pierre Bellon’s family, nor a corporate offi cer of Bellon SA – succeeded Pierre Bellon as Chief Executive Offi cer of Sodexho Alliance. Pierre Bellon remained as Chairman of the Board;

the disclosures within this Reference Document of the relationship between Sodexho Alliance and Bellon SA. These include the service agreement described below (the fee basis of which was approved by shareholders in accordance with the procedure required under French law for regulated related-party agreements), and the status of and changes in the ownership interest of Bellon SA in Sodexho Alliance (disclosed on page 223 of this Reference Document).

•

•

•

•

Regulated related-party agreements On December 31, 1991, Bellon SA and Sodexho Alliance entered into a service agreement whereby Bellon SA provides Sodexho Alliance and Sodexho Group companies with assistance and advice in areas such as strategy, fi nance, accounting and capital markets, either directly or with the assistance of external advisers. In return for these services, Bellon SA is paid a fee, the amount of which is approved annually by the Board of Directors of Sodexho Alliance in accordance with the relevant legal requirements.

The following are directors of both companies: Pierre Bellon, Rémi Baudin, Bernard Bellon, François-Xavier Bellon, Sophie Clamens, Nathalie Szabo and Astrid Bellon. Bellon SA invoiced a total of 8,126,800 euro (excluding VAT) to Sodexho Alliance under this agreement for Fiscal 2007.

On September 13, 2005, Bellon SA and Michel Landel clarified various terms of the latter’s employment contract. Bellon SA undertook to make various payments to Michel Landel in the event of the termination of his contract over and above the termination payments to which he would be entitled under the law or collective agreements.

Bellon SA also agreed to enroll Michel Landel in the Sodexho Group executive retirement benefit plan, in addition to his compulsory retirement benefit entitlement. Contributions paid with respect to Fiscal 2007 amounted to 128,664 euro.

On June 18, 2007, two share exchange transactions took place: (i) Sodexho Alliance transferred all the shares of Excel SAS to Sofi nsod SAS, in exchange for Sofi nsod SAS shares; followed by (ii) Sofi nsod SAS transferred all the shares of Excel SAS to Loisirs Developpement SAS in exchange for shares in Loisirs Developpement SAS.

As far as we are aware, there are no other service agreements between any corporate offi cer and Sodexho Alliance or a subsidiary of Sodexho Alliance from which he/she might derive a benefi t.

•

•

•



5. CHAIRMAN’S REPORT ON THE OPERATING PROCEDURES OF THE BOARD OF DIRECTORS AND ON INTERNAL CONTROL PROCEDURES

“In accordance with article L. 225-37 of the Commercial Code, the present report is issued as a supplement to the Board of Directors’ Report in order to inform shareholders about the preparation and organization of the work of the Board of Directors and about internal control procedures.”

5.1 Preparation and organization of the work of the Board of Directors

Operating procedures of the Board of DirectorsIn addition to the company’s bylaws, the Board of Directors is governed by the Board’s Internal Rules, which defi ne the Board’s mission, set the number of Board members, establish the Directors’ Charter, and determine the minimum number of Board meetings and the allocation of directors’ fees. The Internal Rules also set assessment criteria for the performance of the Board, organize the delegation of powers to the Chief Executive Offi cer, and defi ne the policy for issuing guarantees.

Mission of the Board of DirectorsThe Board of Directors establishes corporate strategy, appoints corporate offi cers to run the business, supervises the management of the business, assesses internal control procedures, and oversees the quality of information provided to shareholders and to the fi nancial markets in the fi nancial statements and in connection with major fi nancial transactions.

As required by law, the Board of Directors fi nalizes the financial statements, proposes dividends, and makes decisions on investments and fi nancial policy.

At least three days ahead of Board meetings, each Board member is given briefi ng documents so that he or she can review or investigate the issues to be discussed.

The Group’s senior operational executives keep the Board informed of market conditions, strategy, the resources used in their activities, and action plans implemented to meet objectives.

The Board of Directors performs periodic in-depth reviews of the fi nancial statements at meetings attended as necessary by members of the Group’s operational and financial management teams and by the internal and external auditors.

The Board of Directors is also kept regularly informed of questions, comments and criticisms raised by shareholders, whether at shareholders’ meetings or by mail, e-mail or telephone.

The Directors’ CharterEach Director must personally own at least 400 Sodexho Alliance shares.

Except in cases of force majeure, all Directors of Sodexho Alliance must attend shareholders’ meetings.

Directors are required to disclose to the Board all actual or potential confl icts of interest and must abstain from voting on those matters.

Any Director of Sodexho Alliance who obtains unpublished information during the course of his or her duties is bound by a duty of confi dentiality. Directors are also prohibited from trading in Sodexho Alliance securities:

during a period commencing thirty calendar days before the Board meeting that fi nalizes the interim consolidated financial statements and ending two business days after the publication of those fi nancial statements;

during a period commencing September 1 and ending two business days after publication of the annual consolidated fi nancial statements.

Transactions by Directors in the company’s shares must be disclosed to the public. Consequently, Directors are required to inform the Chief Financial Offi cer or Corporate Secretary of all transactions in Sodexho Alliance shares.

•

•



Board meetingsThe Board of Directors met eight times during Fiscal 2007, fulfi lling the minimum requirement of four meetings per year as stated in the Internal Rules.

Date Main items on the agenda Attendance rate

Sep 12, 2006

Approval of budgets for Fiscal 2007Business update presented by Group Senior Vice President Marketing

••

93%

Nov 14, 2006

Finalizing the fi nancial statements for Fiscal 2006Finalizing the Board ReportConvening of the Combined Shareholders’ Meeting

••• 86%

Jan 16, 2007 Adoption of new stock option plan• 100%

Jan 30, 2007 Business update for opening months of Fiscal 2007• 93%

Jan 30, 2007 Nomination of Chairman of the Board• 93%

Mar 14, 2007

Business update for fi rst 5 months of Fiscal 2007Impact of IFRS implementationPresentation on Service Vouchers and Cards activity

••• 79%

April 24, 2007

Finalizing the interim consolidated fi nancial statements for the six months to February 28, 2007Update on Group communications and brand strategy

•

• 100%

June 6, 2007 Update on investment projects• 86%

The average attendance rate during fi scal 2007 was 91%.

Composition of the Board of DirectorsA list of members of the Board of Directors is provided on page 56 of this Reference Document.

The Board of Directors has fourteen members, four of whom are women. Ten are French nationals, two are American, one is Canadian and one is British.

Directors are chosen for their ability to act in the interests of all shareholders and for their expertise, experience and understanding of the strategic challenges in markets where Sodexho operates.

The composition of the Board is intended to refl ect the geographic mix of the business (as far as possible), to provide a range of technical skills, and to include individuals with in-depth knowledge of Sodexho’s activities.

Currently, the term “independent director” has no defi nition in French law. However, the Bouton report on corporate governance offers the following defi nition of director independence:

“A director is independent when he or she has no relationship of any kind whatsoever with the corporation, its group or the management of either that is such as to color his or her judgment.”

Based on this defi nition, the Board regards all Sodexho Alliance directors as independent.

This is because the Board of Directors is a collegiate body that collectively represents all the shareholders. Each Board member has a duty to act at all times in the interest of all shareholders and in the corporate interest of Sodexho Alliance.

However, to comply with different concepts of director independence, the Nominating Committee provides the Board of Directors from time to time with a list of Directors qualifying as independent.

During Fiscal 2007, six Board members qualified as independent directors.

Directors hold offi ce for a term of three years.

Board CommitteesTo support its decision-making process, the Board has created three Committees, each with its own Charter. Broadly, their role is to examine specifi c issues ahead of Board meetings, and to submit opinions, proposals and recommendations to the Board.

Audit CommitteeThe Audit Committee is chaired by Robert Baconnier, who is considered a fi nancial expert. The other members are Mark Tompkins and François Périgot. Sophie Clamens and Rémi Baudin are invited to attend all Audit Committee meetings, but are not members.

The Audit Committee is responsible for ensuring that the Group’s accounting policies are appropriate and consistently applied and that effective internal controls are in place. The Committee periodically reviews Senior Management reports on risk exposure and prevention.



The Committee assesses proposals from auditing fi rms and submits candidate fi rms for approval by the general shareholders’ meeting.

It also performs an annual review of the fees paid to the auditors of Sodexho Alliance and its subsidiaries, and assesses auditor independence.

In fulfi lling its role, the Audit Committee is assisted by the Chief Executive Offi cer, by the Group Chief Financial Officer, the Group Internal Audit Director, and by the external auditors. It may also make inquiries of any Group employee and seek advice from outside experts.

Michel Landel (Chief Executive Offi cer of Sodexho Alliance), Siân Herbert-Jones (Group Chief Financial Offi cer) and the Group’s Internal Audit Director are regularly invited to attend Audit Committee meetings to discuss their activities and answer questions.

The Audit Committee met four times during Fiscal 2007, with a 100% attendance rate. Issues addressed by the Committee included:

approval of the Internal Audit Plan for Fiscal 2007;

review of the principal accounting policies applied by the Group;

organization of the fi nance function within the Group;

reports issued by the Internal Audit department, and progress reports on the implementation of internal audit recommendations;

progress reports on the “CLEAR” project (internal control assessment, particularly with respect to the Sarbanes-Oxley Act and the “Loi de Sécurité Financière”);

review of the Form 20-F for Fiscal 2006 fi led with the Securities and Exchange Commission;

supervision of the independence and work of the external auditors. The Committee also approved the terms of engagement and fees of the auditors of Sodexho Alliance and its subsidiaries in connection with the audit of the consolidated financial statements and assessment of internal control procedures for Fiscal 2007. The Audit Committee also approved in advance all other engagements performed by the Group’s auditors and by member fi rms of their international networks.

The Audit Committee reviewed the annual consolidated financial statements for Fiscal 2006, and the interim consolidated financial statements for the six months ended February 2007. In addition to four formal meetings, the Chairman of the Audit Committee also had periodic meetings during Fiscal 2007 with the Group Chief Executive Offi cer, the Group Internal Audit Director, the Group Chief Financial Offi cer and the external auditors.

Nominating CommitteeThe Nominating Committee is chaired by François Périgot. The other members are Patricia Bellinger, Nathalie Szabo, Pierre Bellon and Rémi Baudin.

••

••

•

•

•

This Committee examines proposals made by the Chairman of the Board, and advises the Board on the appointment of Directors, the Chief Executive Offi cer and Chief Operating Offi cer(s). It also:

examines proposals made by the Chief Executive Offi cer on succession plans for members of the Executive Committee and other key executives, and advises the Board on these proposals;

ensures that the Chief Executive Officer is able to propose potential replacements to the Board in complete confi dence at any time if a position suddenly becomes vacant.

The Committee reviews nominees prior to their election as Directors, and where it sees fi t assesses the position of Directors by reference to the criteria related to the composition of the Board specifi ed in the relevant legislation and in the Board’s Internal Rules. For compliance reasons, the Committee also provides the Board of Directors from time to time with a list of Directors qualifying as independent.

The Nominating Committee met formally twice in Fiscal 2007 to discuss succession planning for members of the Group Executive Committee. In particular, it reviewed the arrangements for replacing Executive Committee members on an urgent basis, and for the replacement of Richard Macedonia (Group Chief Operating Offi cer, CEO North America, Food and Facilities Management services) by George Chavel effective September 1, 2007.

The attendance rate was 100%.

Compensation CommitteeThe Compensation Committee is chaired by Rémi Baudin. The other members are Patricia Bellinger, Pierre Bellon and Bernard Bellon.

This Committee makes proposals relating to compensation packages for corporate offi cers, executive compensation policy, performance-based incentives (including stock option plans), and employee stock ownership plans.

The Committee met three times in Fiscal 2007 to make recommendations to the Board on issues such as the advisability of introducing a new International Employee Stock Ownership Plan, the implementation and plan rules of a new stock option plan, a review of executive incentivization tools, and compensation packages for the Chairman and the Chief Executive Offi cer. The Committee also offered its opinion to the Board on the granting of 1.5 million stock options to 450 senior managers under the 2007 plan in accordance with individual grants as proposed by the Chief Executive Offi cer.

The average attendance rate in Fiscal 2007 was 83%.

•

•



Working Group: Public-Private Partnership ProjectsThe Board of Directors has also set up a working group to conduct in-depth studies of Public-Private Partnership and Private Finance Initiative investment projects. Recommendations from this working group are used by the Board in deciding whether to authorize the investments and issue any related guarantees.

The working group consists of four directors (Sophie Clamens, Robert Baconnier, Pierre Bellon and Mark Tompkins) and also includes Michel Landel (Chief Executive Officer), Siân Herbert-Jones (Group Chief Financial Offi cer), and members of the Group Finance Department. The group is chaired by Siân Herbert-Jones.

Assessment of Board operating proceduresFollowing an assessment of Board operating procedures conducted by one of the Directors in Fiscal 2004, a number of improvements were made to the Board’s Internal Rules during the following fi scal year, including the location and length of meetings and themed meetings. During Fiscal 2006, Board members expressed an interest in holding periodic meetings with Group Executive Committee members, and a series of such meetings was scheduled.

In September 2006, the Board decided to conduct a new formal self-assessment procedure. The results of this assessment will be presented to the Board during Fiscal 2008.

5.2 Internal control proceduresSodexho’s senior management demonstrated its commitment to enhancing internal control with the launch in Fiscal 2004 of the CLEAR program (Controls for Legal requirements and to Enhance Accountability and Reporting). This ambitious program resulted in Sarbanes-Oxley certifi cation in Fiscal 2006, confi rmed by the Group’s external auditors. On April 24, 2007 the Board of Directors of Sodexho Alliance decided to delist from the New York Stock Exchange and deregister from the U.S. fi nancial market. Despite this decision, Sodexho has reaffi rmed its determination to improve the effectiveness of internal control, which remains a key priority. It is for this reason that management has committed to reinvesting part of the savings gained by delisting from the NYSE to provide robust, sustainable improvements to the internal control structure.

General organization of internal control proceduresThe Group’s principal internal control objectives are:

to ensure that management decisions, the way in which the Group conducts business, and the behavior of its employees are consistent with the strategies and policies decided by the Board of Directors, with applicable laws and regulations, and with the Group’s internal policies and procedures;

to ensure that fi nancial information provided to the Board of Directors and to the fi nancial markets fairly reflects the Group’s financial position and gives a reasonable assessment of any actual or potential risks incurred by the Group.

The internal control system is based on the Group’s values and policies as defi ned by Sodexho Alliance senior management and implemented by each subsidiary, taking account of local factors.

Sodexho is at the service of its clients, its employees and its shareholders.

Its mission is to improve the quality of daily life.

Its signature is “Making Every Day a Better Day”.

Its values: service spirit, team spirit, spirit of progress.

Its ethical principles include trust, respect for people, transparency and business integrity.

Contributing to economic and social development in every country where Sodexho operates.

All Executive Committee and Operational Committee members have signed the Sodexho Alliance Ethical Principles and Sustainable Development Contract. They have also undertaken to ensure that these principles are applied within the organizations for which they are responsible.

Sodexho also has a Code of Conduct, which has been signed by the members of the Executive Committee and key fi nance executives of the Sodexho Group.

In November 2006, the Group Executive Committee recommended to the Board of Directors the adoption of a Business Integrity Code. The code enshrines Sodexho’s core beliefs and practices in the area of business ethics, so that every employee understands and shares the Group’s commitment to business integrity.

The Group has long-standing, detailed policies designed to ensure that risks are assessed and managed at appropriate levels within the organization.

•

•



Group Policies are widely distributed within the organization and are available on the Sodexho intranet, to which many employees have access.

These policies cover Sodexho’s strategic imperatives, plus guidelines applicable in areas such as Client retention, Human Resources, Finance, Purchasing, Information Systems, Communications and Sustainable Development.

In Human Resources, Group senior management has focused on developing selection and development policies for the key executives who comprise the Management Committees of the principal subsidiaries. These policies refl ect the commitment to making Sodexho’s human capital a genuine competitive advantage by attracting, developing, motivating and retaining the best talent and by promoting equal opportunities and cultural diversity at every level of the organization. They provide a framework for management structures, recruitment, training, career and succession planning, and fi xed and variable compensation policy.

Group financial policies state that Sodexho Alliance has chosen to operate in activities that require little or no investment to support organic growth and that generate signifi cant amounts of cash.

These fi nancial policies establish rules applicable to such areas as investment approvals, working capital reduction, cash management, borrowings, and the distribution of subsidiaries’ profi ts.

They aim to ensure that the fi nancial aspects of business growth are properly managed and to allow the generation of suffi cient cash to fi nance growth, reward shareholders and service debt.

Group fi nancial policies also set forth principles for the keeping of accounting records, and stress the importance of having procedures to ensure the reliability of fi nancial projections. They state that each profi t center manager is accountable for all information produced within his/her sphere of responsibility, including projections. Each manager must obtain assurance that such information is accurate, and that reporting and publication deadlines are met; he/she must also make sure that his/her staff are fully aware of these imperatives and that controls are in place to ensure that these objectives are met.

The ability to meet reporting deadlines, and the quality and reliability of financial information, are factors in assessing the performance of managers, especially that of the Managing Directors and Finance Directors of the Group’s subsidiaries.

As regards borrowings, Group fi nancial policies require all decisions involving external fi nancing to be made by the Group Chief Financial Offi cer, Chief Executive Offi cer or the Board of Directors, depending on the amount and type of the transaction.

In addition:

substantially all borrowings must be at fixed rates of interest, or converted to fi xed-rate using hedging instruments;

currency risks on borrowings and foreign-currency loans to subsidiaries must be hedged.

Group financial policies are designed to prevent any speculative positions being taken and to avoid risk in connection with financing and cash management activities.

A description of all planned derivatives transactions, backed by financial and economic analyses, must be submitted for approval to the Group Chief Financial Offi cer, to the Chief Executive Offi cer, and if necessary to the Board of Directors. The notes to the consolidated fi nancial statements include disclosures about Sodexho’s current use of interest rate and currency instruments.

The Information Systems and Technologies Department created in Fiscal 2008 a new centralized organization in order to accelerate synergies, reduce the costs of the technical infrastructures and ensure improved compatibility of the Group’s systems. This new structure will provide support for project management, create visibility for existing projects, support for fi nancial analyses, assist in implementation, manage departmental human resources and optimize the effi ciency of the Group’s information systems. The Information Systems and Technologies Governance Committee approves investments, monitors the progress of projects, and performs cost/benefit analyses of security standards and disaster recovery plans.

In addition to these principles and policies, the Chief Executive Offi cer regularly issues Management Updates to the 200 key Group executives. These updates provide a channel for the Chief Executive Offi cer to inform executives about strategic orientations and to help them mobilize their teams around shared objectives. They are designed to ensure that the Group’s strategies and action plans for progress are clearly understood.

The two updates issued in Fiscal 2007 included an analysis of the Group’s results for Fiscal 2006 and the fi rst six months of Fiscal 2007, and full-year targets for Fiscal 2007. They also provided an opportunity to share the strategic imperatives and objectives of the Sodexho Strategy Road-Map, and to give progress reports on key initiatives: diversity and integration, corporate citizenship (especially the Stop Hunger program), business integrity, and the CLEAR internal controls program (see page 73 of this document). Also included were the fi ndings of the Employee Engagement Survey, conducted in 35 countries where 78,000 team members participated. More than 80% of these team members are engaged and are proud to be part of the Group and 83% indicated that they would not hesitate to recommend Sodexho to a friend looking for employment.

•

•



These principles and policies are also supported by Job Descriptions, Annual Objectives and (for key executives) clearly-defined Delegations of Authority, which are reviewed annually and formally communicated to managers by their superiors.

Delegations of authority cover human resources, fi nancial and environmental issues, and include the following:

all signifi cant new contracts must be approved by a member of the Executive Committee;

all significant international purchasing contracts must be approved by the Group Senior Vice President, Marketing;

major investment projects, and divestments of signifi cant subsidiaries or activities, must be approved by the Group Investment Committee (comprising the Chief Executive Officer and Group Chief Financial Offi cer), and if appropriate by the Board of Directors;

the principal local banking partners must be approved by the Group Chief Financial Offi cer;

only the Chief Executive Offi cer, under powers delegated by the Board and up to certain limits, has authority to issue fi nancial guarantees and performance bonds in the name of Sodexho Alliance. Guarantees issued by subsidiaries must be authorized in advance by the Group Chief Financial Offi cer.

Delegations of authority are generally implemented via “accountability contracts” in the form of the three-year plan and annual budget, and must comply with the Group’s overall policies.

The Group’s strategy and targets are discussed each year during the preparation of the three-year plan. The plan is presented to the Board of Directors by the Chief Executive Offi cer. This plan aims to assess the potential of each business unit, and the resources needed to fulfi ll that potential. The process includes setting strategic medium-term goals and allocating the necessary resources to meet them, based on interaction and dialogue between the Executive Committee and the business units.

The three-year plan and related action plans are incorporated into a Budget, which is submitted to the Board of Directors for approval. Financial data for the fi rst year of the three-year plan usually represent the budget for the forthcoming fi scal year.

The managers responsible for each budget have authority to accept and sign off all operating costs within their approved budget.

Operational performance indicators (relating to client retention, growth on existing sites and business development) are built into the three-year plan, and form part of the decision-making process. Actual performance is measured against these indicators on a monthly or quarterly basis. The Group Finance Department co-ordinates the process, and monitors operational performance indicators using a scorecard.

•

•

•

•

•

The Group Legal Department and local legal managers offer upfront support to line personnel, and monitor compliance with the law. They ensure that contract negotiations are conducted fairly; that risks are confi ned to non-compliance with contractual service obligations, and are limited in terms of value and time; that appropriate insurance cover has been taken out; and that all other appropriate measures are taken to protect the Group’s interests.

The Group Internal Audit Department independently reviews internal control procedures, bearing in mind that any control – however well designed and rigorously applied – can provide only reasonable assurance and not an absolute guarantee.

The Internal Audit Department reports directly to the Chairman of the Board, thereby guaranteeing its independence within the organization. The Internal Audit Director and the Chairman of the Board meet on a monthly basis. The Internal Audit Director works closely with the chairman of the Audit Committee, holding informal meetings (approximately six times per year).

The Department performs internal audits of Group entities based on an Internal Audit Plan. An annual review of potential risks, conducted by the Chairman of the Board of Directors, the Group Chief Executive Offi cer, the Group Chief Financial Offi cer and the Internal Audit Director (with input from the external auditors and the Executive Committee), is used to prepare an annual list of organizational structures, subsidiaries, and other issues which might be subject to internal audit. This review forms the basis for the annual Internal Audit Plan.

The responsibilities of the Internal Audit Department include:

obtaining assurance that delegations of authority and procedures have been established and communicated to the appropriate levels of management, and checking that they are properly implemented;

helping to assess subsidiaries’ internal controls, issuing action plans designed to remedy identified control weaknesses, and monitoring implementation of these action plans.

The Internal Audit Department may also conduct special assignments commissioned by the Chairman of the Board, the Audit Committee, the Chief Executive Offi cer or the Executive Committee.

All of the principal engagements contained in the Internal Audit Plan approved by the Audit Committee at the start of Fiscal 2007 were completed by the end of the fi scal year. The Group Internal Audit Department, which had an average of approximately 23 staff, conducted 81 engagements during Fiscal 2007 in 30 countries. In addition to this central team, around fi fty internal auditors (about half them based in the USA) are assigned to subsidiaries. The Group Internal Audit Department co-ordinates their work and provides them with technical assistance.

•

•



The Internal Audit Department conducts regular follow-ups to ensure that its post-audit action plans are being implemented by Group companies. An overall progress report is updated regularly and submitted on a semi-annual basis to the Chief Executive Offi cer, the Group Chief Financial Offi cer, the Chairman of the Board and the Audit Committee. The Audit Committee will not accept any refusal by a subsidiary to implement an internal audit recommendation. For Fiscal 2006 and 2007, more than 95% of recommendations were either implemented or addressed in an action plan prepared by the management of the subsidiary involved.

The Internal Audit Department also plays a major role in the CLEAR project (Controls for Legal requirements and to Enhance Accountability and Reporting, see page 73 of this report) and performs an independent, objective evaluation of the effectiveness of controls identifi ed, documented and performed by management.

Finally, the Internal Audit Department co-ordinates external audit engagements, and reviews the external auditors’ annual fee budgets (for both statutory audit work and other engagements) prior to their approval by the Audit Committee. Each year, the external auditors prepare audit instructions, which are agreed with the Group Finance Department and Internal Audit Department and issued to all external auditors of Group subsidiaries.

Description of internal control procedures related to the preparation of accounting and fi nancial informationThe Group Finance Department is responsible for the reliability of fi nancial and accounting information. It also plays a role in risk management via a periodic risk mapping exercise, which it presents to the Executive Committee and the Audit Committee.

Production and analysis of fi nancial information are based on procedures applied at operating site level, within the fi nance departments of subsidiaries, and at Group Finance Department level.

Using information reported by each site, the subsidiaries’ fi nance departments prepare:

monthly: income statements (year-to-date) and balance sheets, plus full-year projections for the income statement and balance sheet;

quarterly: income statements (year-to-date), balance sheets and cash fl ow statements;

half-yearly: interim fi nancial statements (for the six months to February 28), subject to limited review by the external auditors in the case of the larger subsidiaries;

annually: individual company financial statements prepared under local generally accepted accounting principles, and a consolidation package adjusted to comply with IFRS as adopted by the European Union.

•

•

•

•

The Managing Directors and Finance Directors of each business unit sign off the consolidation package, and the local external auditors of the principal subsidiaries issue an opinion on the package as part of their audit engagement.

The finance department of each subsidiary prepares a monthly analysis of variances between budgeted and actual results, together with an estimate of the impact on results for the fi scal year. These analyses are presented to the subsidiary’s Managing Director so that corrective action can be taken at the appropriate level. Actual results and variance analyses are submitted to the Group Finance Department in the form of a Monthly Reporting Package, for review and consolidation.

The Group Chief Financial Offi cer presents this reporting package (actual and estimated) to the Executive Committee every month.

Quarterly Reviews with each business unit give the Chief Executive Offi cer and Group Chief Financial Offi cer, assisted by the business unit’s Managing Director and Finance Director, an opportunity to assess business trends for their unit on the basis of fi nancial data from the monthly reporting package and of operating data.

The Group Finance Department ensures that all subsidiaries apply accounting policies that comply with Group policies.

Consolidations are produced quarterly.

Ahead of each quarterly consolidation, precise instructions are sent to the subsidiaries’ Finance Directors with a list of schedules to be submitted, standard assumptions to be applied, specifi c issues to be addressed, and a detailed reporting timetable. Additional reporting aids are available on the Finance Department intranet, including the IFRS-based Group accounting manual, the consolidation manual, and the Sodexho detailed chart of accounts.

The consolidation packages submitted by the subsidiaries include financial statements adjusted to comply with IFRS as adopted by the European Union, and analyses of accounts. These form the basis for preparing the interim and annual consolidated fi nancial statements and notes.

The half-year and full-year audit instructions issued by the Group’s external auditors, and agreed with the Group Finance and Internal Audit Departments, include specifi c issues to be addressed during the examination of the year-end fi nancial statements and a description of the Group’s audit objectives. At fi scal year-end, a summary of issues raised by the external auditors is presented to Sodexho’s senior management and to the Audit Committee.

Procedures are in place to identify off balance sheet commitments. This term covers all rights and obligations that may have an immediate or future impact on Sodexho’s financial position but are not recognized (or are only partially recognized) in the balance sheet or income



statement. These include items such as assets pledged as security; guarantees relating to operating contracts (for example bid bonds or performance bonds), to borrowings, or to claims and litigation; lease obligations not recognized in the balance sheet; and commitments under call or put options.

The procedures used to identify off balance sheet commitments include:

periodic reviews of the minutes of the shareholders’ meetings and Board meetings of the subsidiary for contractual commitments, claims and litigation, approvals and asset disposals;

reviews with risk managers and agents/brokers representing insurers with whom the subsidiary has contracted insurance to cover risks related to contingent obligations;

reviews of collateral and other guarantees with banks and other fi nancial institutions;

reviews of litigation and other legal proceedings, including estimates of contingent liabilities, conducted with internal and external legal advisors;

reviews of guarantees and other commitments given or received involving related parties.

Each subsidiary is required to provide a full list of its off-balance sheet commitments.

The Chief Executive Offi cer, assisted by the Group Finance Department, prepares the Group’s published fi nancial information using information derived from monthly reporting packages and from the consolidation, and from operating data required to prepare the Reference Document.

A Disclosure Committee, comprising representatives from Group corporate functions, reviews all financial information prior to publication to ensure that it fairly reflects the Group’s situation. Members include the managers responsible for consolidation, accounting standards, fi nancial communication, legal and human resources and corporate communications and sustainable development.

Assessment of internal control proceduresThe internal controls put in place by management, as described above, are part of an ongoing process of identifying, evaluating and managing the Group’s risk exposures.

The CLEAR initiative, strongly endorsed by the Chief Executive Officer and Group Chief Financial Officer, was approved by the Board of Directors and the Audit Committee, and also received the backing of the Group’s Executive and Operational Committees. Since it was fi rst launched, CLEAR has mobilized more than 700 people within the different subsidiaries and departments of the Group.

This initiative has succeeded in identifying risks and implementing strong internal control. The Audit Committee

•

•

•

•

•

and the Board of Directors as well as various functions within the Group and the external auditors have been regularly informed of the progress of this initiative and the chosen methodologies.

This program addresses:

the control structure, as defined by the five components of the COSO (Committee of Sponsoring Organizations)* framework: Control Environment (integrity, ethics, competencies), Control Activities (norms and procedures), Monitoring (following and updating processes), Risk Assessment (identifi cation, analysis and management of risks), and Information and Communication (receipt and exchange of information);

the dispersal through the organization of operational controls.

Procedures to ensure compliance with the 5 components of COSO have been implemented by the most signifi cant subsidiaries of the Group.

The framework developed for CLEAR, based on the COSO model, segments the Group’s activities into 11 signifi cant processes, which are briefl y described below.

The Revenues and Receivables process covers selling and marketing activities in the Food and Facilities Management services business, including pricing and service offerings, client and contract management, billing, and collection.

The Purchases and Payables process includes procurement, vendor selection, acceptance of goods and services, invoice processing, accounts payable and cash disbursements.

Human Resources covers all personnel management issues, including employee datafile creation and maintenance, job transfers, contract terminations, payroll, variable compensation, employee benefits and profit-sharing.

The Treasury process addresses cash management and fi nancing.

The Inventory process includes physical storage management, data management, inventory flows and valuation.

The Property, Plant and Equipment and Intangible Assets process covers all aspects of the management of such assets, including goodwill.

The Legal and Regulatory process covers areas such as compliance with corporate law and labor law, and legal issues related to commercial practices and insurance.

The Information Systems and Technologies process addresses systems security, systems development and maintenance, business continuity, and application controls.

The Finance process includes reporting/consolidation activities such as budgeting, planning, reporting to/by subsidiaries, period-end procedures, consolidation,

•

•

* See glossary for defi nition.* See glossary for defi nition.



reconciliations between different accounting standards (e.g. local accounting principles to IFRS), and tax management.

Services Vouchers and Cards Operations covers all processes specifi c to this business: relations with clients and affi liates, contract management, order processing, billing, voucher production, and cash management.

The Corporate process addresses delegations of authority, Group performance indicators, and production of the Reference Document and other published information (including documents filed with stock exchange regulators).

The CLEAR program has identifi ed specifi c risks related to each process and sub-process, and approximately 100 suggested controls to address these risks, summarized in a document known internally as the “Sodexho COSO”.

The individuals responsible for the Group’s corporate functions were involved in drafting the Sodexho COSO, as were many managers from business units across the entire Group (including the members of the Operating Committee) and line personnel in over 15 countries where Sodexho has signifi cant operations.

The Sodexho COSO was distributed to around thirty subsidiaries so that they could review, document and update as necessary the processes and controls that apply to their organizational structures. Each process manager has reviewed and validated the defi nition of the controls under his/her responsibility, and (depending on local conditions and risk assessments) has either performed controls from within the Sodexho COSO or developed and implemented specifi c controls to address more localized risks. The main subsidiaries test controls relating to the production of financial statements annually (or more frequently for certain controls) to ensure that they operate effectively. The most signifi cant Group subsidiaries are required to complete a self-evaluation questionnaire about the COSO components, and the managing directors and fi nance directors of the principal subsidiaries must confi rm annually that internal controls are adequate, effective and appropriate to their organization. They have also identifi ed any remedial action plans that may be required. These evaluation procedures are intended to deliver continuous improvements in internal control.

Sodexho is in the process of progressively implementing a specifi c procedure approved by the Board of Directors which provides employees with the opportunity to notify their senior management, anonymously, if they choose, of complaints about accounting, internal control and audit issues. This procedure is designed to protect any Sodexho employee who makes a complaint in good faith.

Sodexho is committed to reinforcing the competencies of its fi nance teams, both at the subsidiary and at the Group level. This commitment includes ensuring that it is adequately resourced in terms of technical expertise in fi nancial reporting. Sodexho also consults external advisers to assist in compliance with accounting standards on complex issues.

On July 16, 2007, Sodexho completed its delisting from the New York Stock Exchange (NYSE) and terminated the registration of its shares under the U.S. Securities Exchange Act of 1934. Sodexho is therefore no longer under any requirement to fi le an Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC).

Sodexho has confi rmed its commitment to ongoing efforts to improve the effectiveness of internal control procedures, refl ecting the status of internal control as a key priority for the Group. This is why the CLEAR program is designed as a long-term initiative, which is constantly being rolled out to more subsidiaries. Management has committed to reinvesting part of the savings gained by delisting from the NYSE to provide robust, sustainable improvements to the internal control structure.

The above report describes the operating procedures of the Board of Directors and the internal control procedures operated by the Group as of November 13, 2007. It will be presented to the shareholders at the Annual Meeting on January 22, 2008. Risk management and strengthening internal control continue to remain key priorities for the Group.

Pierre BellonChairman of the Board of Directors



AUDITORS’ REPORT D

Statutory auditors’ report, prepared in accordance with article L.225-235 of the French Commercial Code, on the report prepared by the President of the Board of Sodexho Alliance SA, on the internal control procedures relating to the preparation and processing of fi nancial and accounting information.

For the year ended August 31, 2007

SODEXHO ALLIANCE SA 3, avenue Newton78180 Montigny-le-Bretonneux

To the shareholders,

In our capacity as statutory auditors of Sodexho Alliance SA and in accordance with article L.225-235 of the French Commercial Code (Code de commerce), we report to you on the report prepared by the President of your company in accordance with article L.225-37 of the French Commercial code (Code de commerce) for the year ended August 31, 2007.

It is for the President to give an account, in his report, notably of the conditions in which the duties of the board of directors are prepared and organized and the internal control procedures in place within the company.

It is our responsibility to report to you our observations on the information set out in the President’s report on the internal control procedures relating to the preparation and processing of fi nancial and accounting information.

We performed our procedures in accordance with French professional guidelines. These require us to perform procedures to assess the fairness of the information set out in the President’s report on the internal control procedures relating to the preparation and processing of fi nancial and accounting information. These procedures notably consisted of:

obtaining an understanding of the objectives and general organization of internal control, as well as the internal control procedures relating to the preparation and processing of fi nancial and accounting information, as set out in the President’s report;

obtaining an understanding of the work performed to support the information given in the report.

On the basis of these procedures, we have no matters to report in connection with the information given on the internal control procedures relating to the preparation and processing of fi nancial and accounting information, contained in the President of the board’s report, prepared in accordance with article L.225-37 of the French Commercial Code (Code de commerce).

Neuilly-sur-Seine and Paris La Défense, November 16, 2007

The Statutory Auditors

PricewaterhouseCoopers Audit KPMG AuditDepartment of KPMG SA

Louis Pierre Schneider Patrick-Hubert Petit

•

•

This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.



6. RISK MANAGEMENT

6.1 Risk Factors

6.1.1 Business risks

Risks related to Food and Facilities Management services contractsFood and Facilities Management services contracts fall into two main categories: profi t and loss and fee-based. The two categories expose the service-provider to different levels of risk.

In a profi t and loss contract, the service-provider is paid for the service provided and bears the entire cost of providing the service. Profi t and loss contracts usually include periodic indexation clauses. If Sodexho is unable contractually to recover signifi cant increases in costs (such as labor or food costs), this could have a material adverse effect on the profi tability of the contract.

In a fee-based contract, the client bears all the costs incurred in providing the service, either directly or by reimbursing the service-provider, irrespective of customer frequency. The service-provider is paid a fi xed or variable management fee.

In practice, Sodexho’s contracts combine features of both of these contract types.

Client retention riskSodexho’s business depends on retaining and renewing contracts with existing clients, and bidding successfully for new contracts. This generally depends on various factors including quality, the cost and suitability of its services, and its ability to deliver competitive services that are differentiated from those of the competitors.

Growth in the Service Vouchers and Cards business is dependent on Sodexho’s ability to achieve geographical expansion and develop new services, and on a trusted brand and established affi liate networks.

Competition riskAt the international level, Sodexho has relatively few competitors. However, in every country where it operates, Sodexho faces signifi cant competition from international, national, and sometimes local operators.

Some existing or potential clients may opt to self-operate their Food and Facilities Management services rather than outsource them.

Dependency riskAlthough business is dependent on Sodexho’s ability to renew existing contracts and win new ones, no single client represents more than 2% of total Group revenues.

No industrial supplier represents more than 3% of the total volume of the Group’s purchases.

Sodexho’s business is not dependent on any patent or licensed brand name of which Sodexho is not the legal owner.

Food safety riskEvery day, Sodexho serves a vast number of meals worldwide, and is committed to the safety of the food and services provided. Sodexho has implemented preventive and control procedures in the area of food safety, designed to ensure strict compliance with the relevant regulations. Staff training and awareness policies are followed in all the countries in which the Group operates.

However, if Sodexho were to incur signifi cant liability at one or more of its sites, this could have an adverse impact on activities, operating margins and reputation.

Facilities Management riskAlthough facilities management services have constituted a part of the business, Sodexho’s strategy includes substantially increasing its weight in the overall mix of activities. Facilities management services will require skilled personnel particularly in the areas of building maintenance, electrical engineering, plumbing, heating and cooling systems. Therefore, the Group faces certain operational risks and has a need for qualifi ed human resources talent.

The knowledge of these markets and the Group’s ability to attract, recruit and train its employees will allow the Group to grow in this highly specialized environment.



6.1.2 Employment riskService quality is largely dependent on the ability to attract, develop, motivate and retain the best talent, and to provide a suffi cient level of training in order to constantly raise standards. Sodexho has developed training policies at every level in the organization, with a particular focus on prevention and safety.

The diversity of backgrounds, cultures and skills among its people represents a challenge, but also an opportunity. Sodexho is committed to capitalizing on this diversity to gain a competitive edge and become a genuine worldwide player, so that Sodexho’s people – at every level – refl ect the diversity of the Group’s clients and customers.

As far as the Group is aware, Sodexho is not exposed to any specifi c labor-related risk other than those that arise in the ordinary course of business for a worldwide group of its size.

6.1.3 Environmental riskSodexho is aware of the potential environmental impact of its activities. Rather than play down this impact, Sodexho makes every effort to manage and limit environmental risk.

The environmental impact of its activities arises mainly from:

consumption of water and energy in Foodservices facilities, food preparation and cleaning;

production of waste from food preparation and cleaning (packaging, organic matter, waste fats and oils, and waste water from cleaning).

6.1.4 Regulatory riskThe nature of Sodexho’s business and its worldwide presence means that it is subject to a wide variety of laws and regulations including labor law, antitrust law, corporate law, and health, safety and environmental law.

Sodexho has the legal structures in place at the appropriate levels to ensure compliance with these laws and regulations.

Changes in laws or regulations could have a direct impact on the business and/or on the services provided. For example, the Service Vouchers and Cards business is subject to national tax and labor law provisions. Signifi cant changes in these provisions as they relate to the issuance of service vouchers could open up opportunities for new contracts or jeopardize existing contracts.

•

•

6.1.5 Interest rate, liquidity, and foreign exchange risk

Because Sodexho has operations in 80 countries, all components of the fi nancial statements are inevitably infl uenced by foreign currency translation effects, and in particular by fl uctuations in the U.S. dollar. However, exchange rate fl uctuations do not generate any operational risk, because each subsidiary bills its revenues and incurs its expenses in the same currency. Sodexho Alliance uses derivative instruments to manage the Group’s exposure to interest rate and foreign exchange risk. Additional information relating to these risks is found in notes 5.1 and 5.2 to the consolidated fi nancial statements.

6.2 Risk ManagementSodexho has a pro-active approach to risk management, with the aim of protecting its employees and clients and safeguarding the interests of the Group and its shareholders.

Specifi c policies are in place designed to ensure that risks are properly evaluated and managed at the appropriate level within the organization. A risk-mapping exercise is conducted each year by the Executive Committee, and presented to the Audit Committee.

Sodexho’s policy on risk management and insurance involves working closely with subsidiaries to:

identify and evaluate the key risk exposures faced by Sodexho, with particular attention focused on the emergence of new risk factors associated with changes in our activities, especially in Facilities Management;

reduce contractual risk, in particular by using limitation of liability clauses or hold-harmless agreements;

achieve the right balance between risk retention (self-insurance) and the insurance market in covering the potential financial consequences of Sodexho’s risk exposure.

6.2.1 Risk coverage

Insurance policiesSodexho’s general policy is to transfer non-retained risk, especially intensity risks1, to the insurance market. Insurance programs are contracted with reputable, highly-solvent insurers.

The principal insurance programs relate to:

liability insurance, which covers against personal injury, property damage or consequential loss caused to third parties. This category includes operational, product, after-delivery and professional liability insurance.

The sums insured depend on the nature of Sodexho’s activities, the country where it operates, and the extent of cover available in the insurance market.

•

•

•

•

•

1 See Glossary for defi nition.1 See Glossary for defi nition.



property insurance, which mainly covers the risk of fi re and explosion, water damage, natural disasters, and (in some countries) acts of terrorism; as a general rule, the sum insured is equal to the value of the insured property. However, some insurance contracts cap the amount paid out under the policy;

workers’ compensation. In countries with no State cover (primarily the United States, Canada and Australia), Sodexho has contracted workers’ compensation programs. The cover provided under these programs complies with the relevant legal requirements in each country.

6.2.2 Risk retentionSodexho self-insures frequency risks (i.e. risks that recur regularly).

In some countries, these retained risks relate primarily to employer’s liability, workers compensation, third-party motor insurance and property insurance.

•

•

Outside North America, deductibles generally vary between 50,000 euro and 150,000 euro per occurrence.

In North America, retained risks range from 300,000 US dollars to 1,000,000 US dollars per occurrence. Since June 1, 2006, these risks have been managed through a captive insurance company.

6.2.3 Placing of risk and total costOn renewing its insurance policies, Sodexho was able to benefi t from the favorable conditions in the insurance market at the end of Fiscal 2007 to extend the scope of its employer’s liability and punitive damage policies and improve the level of coverage, especially for risks associated with Facilities Management activities.

The total cost incurred for the principal insurance and risk retention programs (excluding workers’ compensation) of fully-consolidated Group companies is approximately 40 million euro, equivalent to less than 0.35 % of consolidated revenues.



7. AUDIT FEES

Nature of services PricewaterhouseCoopers KPMG

Amount % Amount %

AuditFiscal 2006

Fiscal 2007

Fiscal 2006

Fiscal 2007

Fiscal 2006

Fiscal 2007

Fiscal 2006

Fiscal 2007

Audit of individual company fi nancial statements and consolidated fi nancial statements 5.2 4.5 52% 77% 3.9 3.4 57% 68%

Sarbanes-Oxley and other audit services 4.5 1.2 45% 21% 2.7 1.6 40% 30%

Sub-total: audit 9.7 5.7 97% 98% 6.6 5.0 97% 98%

Other services (Legal, tax, labor) 0.3 0.1 3% 2% 0.2 0.1 3% 2%

TOTAL 10 5.8 100% 100% 6.8 5.1 100% 100%

The Audit Committee has drawn up a plan whereby one or the other of the international fi rms retained as auditors by Sodexho Alliance (PricewaterhouseCoopers and KPMG) will be appointed to act as auditor to virtually all Group subsidiaries. The aims of this plan are to ensure that the Group receives a consistent and high-quality service, and to centralize relations with the external auditors at Senior Management and Audit Committee level. This plan will be progressively rolled out until 2008, refl ecting the fi xed-term audit mandates that exist in some countries.

Audit fees paid by Group subsidiaries to fi rms other than PricewaterhouseCoopers and KPMG (and member fi rms of their international networks) amounted to 0.3 million euro for Fiscal 2007.

Audit fees paid during the Fiscal year were impacted by:

The delisting of Sodexho Alliance’s shares from the New York Stock Exchange at the end of the fi scal year, which resulted in the reduction of fees as the Group is no longer required to comply with Section 404 of the Sarbanes-Oxley Act. However, certain work had already been performed prior to the announcement.

The implementation by the auditors of assessment procedures for internal controls, reinforcing the Group’s insistence on maintaining a satisfactory control environment. These fees are included in the table above as “Sarbanes Oxley and other audit services”.

The Audit Committee approved in advance all services performed by the auditors during Fiscal 2007. The Audit Committee has established and implemented a policy to approve all audit missions and fees and to pre-approve other services provided by the external auditors.

•

•


2. Corporate GovernanceExecutive Committee

Executive Committee

Michel LandelBorn November 7, 1951.Married, 3 children.French.Graduate of the European Business School.

Business address:Sodexho Alliance3, avenue Newton – 78180 – Montigny le Bretonneux, France.

BackgroundMichel Landel began his career in 1977 at Chase Manhattan Bank, and in 1980 became the manager of a building materials factory for the Poliet Group.

He was recruited by Sodexho in 1984 as Head of Operations for East and North Africa before being promoted in 1986 to Head of African Operations for the Remote Sites business. In 1989, he took charge of North American operations. He was closely involved in the 1998 alliance with Marriott Management Services, and in the formation of Sodexho Marriott Services. In 1999, he became the Chief Executive Offi cer of Sodexho Marriott Services, now Sodexho, Inc.

In February 2000, Michel Landel was appointed Vice-Chairman of the Sodexho Alliance Executive Committee.

From June 2003 to August 2005, Michel Landel held the post of Group Chief Operating Offi cer, responsible for North America, the United Kingdom and Ireland, and for the Remote Site activities.

He was appointed Chief Executive Officer of Sodexho Alliance on September 1, 2005.

Other corporate offi ces held Sodexho, Inc. (Director);

Sodexho Holdings Ltd (Director).

Other positions Chairman of the STOP Hunger Association (France);

Chairman of the Sodexho Foundation (United States);

Member of the Management Board of Sodexho Pass International SAS.



••

•••

1. CHIEF EXECUTIVE OFFICER


Corporate Governance 2.Executive Committee

2. EXECUTIVE COMPENSATION FOR FISCAL 2007

During Fiscal 2006, Michel Landel served as Chief Executive Offi cer.

The amount of compensation and other benefi ts paid to the Chief Executive Offi cer was as follows:

(in euro) Total(1) Fixed salary Variable bonuses Benefi ts in kind(2)Supplementary

retirement benefi t(3)

Fiscal 2006 1,516,065 843,447 567,943 4,224 100,451

Fiscal 2007 2,213,807 925,967 1,155,794 3,382 128,664

(1) Total including gross amount of all forms of compensation paid during the fiscal year for positions held in Bellon SA, Sodexho Alliance, and/or Sodexho Group companies.

(2) Includes company car, accommodation and other non-recurring expenses.(3) Contribution to a supplementary retirement benefit plan during the fiscal year.

Executive CommitteeThe ten members of the Executive Committee as of August 31, 2007 were:

Michel Landel, Chief Executive Officer, Sodexho Alliance;

Elisabeth Carpentier, Group Senior Vice President and Chief Human Resources Offi cer;

Robert Cirillo, Group Senior Vice President, Strategic Planning and Innovation;

Pierre Henry, Group Chief Operating Officer, Chief Executive Offi cer, Service Vouchers and Cards, and South America, Food and Facilities Management services;

Siân Herbert-Jones, Group Chief Financial Offi cer;

Philip Jansen, Group Chief Operating Offi cer, Chief Executive Officer, Europe, Food and Facilities Management services;

Nicolas Japy, Group Chief Operating Officer, Chief Executive Offi cer, Remote Sites Services, Asia/Australia Food and Facilities Management services;

Richard Macedonia, Group Chief Operating Offi cer, Chief Executive Offi cer, North America Food and Facilities Management services;

Clodine Pincemin, Group Senior Vice President, Communications and Sustainable Development;

Damien Verdier, Group Senior Vice-President, Marketing.

•

•

•

•

••

•

•

•

•

The total amount of compensation for Fiscal 2007 paid to the ten members of the Executive Committee in post as of August 31, 2007 was 9,202,402 euro. This amount comprised a fi xed component of 5,036,276 euro; and a variable component of 4,166,126 euro, including benefi ts in kind and supplementary retirement benefi ts.

Compensation paid to Executive Committee members comprises base salary, annual performance and medium-term bonuses and benefi ts in kind, and supplementary retirement benefi ts paid by Sodexho Alliance and other Group companies.

The annual performance bonus, which is a variable component of executive compensation, amounts to between 50% and 80% of base salary if the performance targets set at the beginning of the fi scal year are met.

Up to 70% of the performance bonus is based on the fi nancial performance of the Group, or of the business unit for which the executive is responsible, during the previous fi scal year. The rest is linked to the attainment of personal objectives set at the start of the fi scal year, including targets related to indicators such as client retention, diversity or human resources management for the business unit for which the executive is responsible.

Bonuses are calculated and paid after the year-end accounts have been fi nalized and audited.



3. STOCK OPTION POLICY

The Group’s executive stock option policy has two objectives:

linking the fi nancial interests of executives to those of the shareholders;

attracting and retaining the entrepreneurs needed to expand and strengthen its market leadership.

Stock options are not granted to members of the Board of Directors.

3.1 Sodexho Alliance stock options granted to employeesThe table below shows current plans awarded by Sodexho Alliance, authorized at the extraordinary general shareholders’ meetings of February 21, 2000, February 4, 2003, February 3, 2004 and January 31, 2006.

Date of Board Meeting authorizing the plan

Total number of options

grantedExercise period

start date Expiration dateExercise

price (euro)

Number of options outstanding

at August 31, 2007 (excl. grantees no longer employed by the Group)

Jan 11, 2002 (B) 1,186,542 Jan 11, 2006 Jan 10, 2008 47.00 304,075

Sep 17, 2002 12,000 Apr 01, 2006 Mar 31, 2008 47.00 0

Oct 10, 2002 (A) 1,820 Oct 10, 2006 Oct 09, 2007 21.87 585

Oct 10, 2002 (B) 1,400 Oct 10, 2006 Oct 09, 2007 21.87 350

Jan 27, 2003 (A) 1,147,100 Jan 27, 2004 Jan 26, 2009 24.00 275,711

Jan 27, 2003 (B) 1,713,950 Jan 27, 2004 Jan 26, 2009 24.00 397,034

Jan 27, 2003 (C) 56,750 Jan 27, 2004 Jan 26, 2009 24.00 10,150

Jun 12, 2003 (B) 84,660 Jan 27, 2004 Jan 26, 2009 24,00 3,000

Jan 20, 2004 (A) 483,350 Jan 20, 2005 Jan 19, 2010 24.50 360,303

Jan 20, 2004 (B) 518,633 Jan 20, 2005 Jan 19, 2010 24.50 213,860

Jan 20, 2004 (C) 7,700 Jan 20, 2005 Jan 19, 2010 24.50 6,350

Jan 18, 2005 (A) 537,100 Jan 18, 2006 Jan 17, 2011 23.10 436,228

Jan 18, 2005 (B) 466,000 Jan 18, 2006 Jan 17, 2011 23.10 305,068

Jan 18, 2005 (C) 6,900 Jan 18, 2006 Jan 17, 2011 23.10 6,400

Jun 16, 2005 (B) 20,000 Jun 16, 2006 Jun 15, 2011 26.04 20,000

Sep 13, 2005 (B) 10,000 Sep 13, 2006 Sep 12, 2011 28.07 10,000

Jan 10, 2006 (A1) 369,604 Jan 10, 2007 Jan 09, 2012 34.85 333,679

Jan 10, 2006 (A2) 192,996 Jan 10, 2007 Jan 09, 2012 34.85 171,035

Jan 10, 2006 (B) 399,802 Jan 10, 2007 Jan 09, 2012 34.85 340,541

Jan 10, 2006 (C) 5,050 Jan 10, 2007 Jan 09, 2012 34.85 5,050

Jan 16, 2007 (A1) 502,600 Jan 16, 2008 Jan 15, 2014 47.85 501,900

Jan 16, 2007 (A2) 337,600 Jan 16, 2008 Jan 15, 2013 47.85 334,100

Jan 16, 2007 (B) 500,000 Jan 16, 2008 Jan 15, 2013 47.85 496,400

Jan 16, 2007 (C) 4,500 Jan 16, 2008 Jan 15, 2013 47.85 4,500

Apr 24, 2007 (A1) 20,000 Apr 24, 2008 Apr 23, 2014 55.40 20,000

Apr 24, 2007 (A2) 1,600 Apr 24, 2008 Apr 23, 2013 55.40 1,600

(A) Plan reserved for non-American employees. (A1) Plan reserved for employees resident in France. (A2) Plan reserved for employees not resident in France.(B) Plan reserved for employees resident in the United States.(C) Plan reserved for American employees not resident in the United States.

••



The following Stock Incentive Plans awarded by Sodexho Marriott Services (SMS Plans) to its North American employees between 1997 and 2001, assumed by Sodexho

Alliance in 2001 via its 100%-owned subsidiary Sodexho Awards (see note 4.23.4 to the consolidated financial statements), are still current:

Date of grant

Total number of options assumed

Exercise period start date Expiration date

Exercise price (USD)

Number of options outstanding

at August 31, 2007 (excl. grantees no longer employed by the Group)

Nov 06, 1997 112,648 Nov 06, 1998 Nov 06, 2012 30.0100 26,199

Jun 08, 1998 478,507 Oct 08, 1999 Jun 08, 2008 38.8195 86,424

Sep 22, 1998 10,999 Sep 22, 1999 Sep 22, 2008 37.8075 1,671

Feb 08, 1999 13,722 Feb 08, 2000 Feb 08, 2009 31.9498 2,096

Nov 22, 1999 1,155,008 Nov 22, 2000 Nov 22, 2009 22.3391 211,760

Jul 19, 2000 13,764 Jul 19, 2001 Jul 19, 2010 23.0135 354

Dec 15, 2000 702,817 Dec 15, 2001 Dec 15, 2010 28.1557 137,000

Jan 05, 2001 2,966 Jan 05, 2002 Jan 05, 2011 27.5656 2,966

Apr 02, 2001 19,281 Apr 02, 2002 Apr 02, 2011 39.7080 3,708



3.2 Sodexho Alliance stock options granted to and exercised by Executive Committee members

The table below shows options granted to or exercised by Executive Committee members under the stock option plans awarded by Sodexho Alliance as described on pages 82-83.

Elisabeth Carpentier

Roberto Cirillo

Pierre Henry

Siân Herbert-

Jones

Plan date Jan 11, 2002 options granted 10,000 3,400 15,000

Exercise price in euro 47.00

options exercised in the Fiscal year 10,000 3,400 15,000

Expiration date Jan 10, 2007 options not yet exercised 0 0 0

Plan date Jan 11, 2002 options granted


options exercised in the Fiscal year

Expiration date Jan 10, 2008 options not yet exercised



options exercised in the Fiscal year 30,000 5,400

Expiration date Jan 26, 2009 options not yet exercised 5,000 1,900 40,000

Plan date Jun 12, 2003 options granted - - -



Expiration date Jan 26, 2009 options not yet exercised - - -













Plan date Jan 16, 2007 options granted 50,000



Expiration date Jan 15, 2013 options not yet exercised 50,000

Plan date Jan 16, 2007 options granted 45,000 50,000



Expiration date Jan 15, 2014 options not yet exercised 45,000 50,000

Plan date Apr 24, 2007 options granted 20,000



Expiration date Apr 23, 2014 options not yet exercised 20,000



Philip Jansen

Nicolas Japy

Michel Landel

Plan date Jan 11, 2002 options granted - 2,500

Exercise price in euro 47.00 options exercised in the Fiscal year 2,500

Expiration date Jan 10, 2007 options not yet exercised - 0


Exercise price in euro 47.00 options exercised in the Fiscal year


Plan date Jan 27, 2003 options granted - 15,000 60,000


Expiration date Jan 26, 2009 options not yet exercised - 0 60,000

Plan date Jun 12, 2003 options granted - - -


Expiration date Jan 26, 2009 options not yet exercised - - -

Plan date Jan 20, 2004 options granted - 10,000 45,000


Expiration date Jan 19, 2010 options not yet exercised - 2,500 45,000










Plan date Jan 16, 2007 options granted 40,000 90,000*



Plan date Apr 24, 2007 options granted


Expiration date Apr 23, 2014 options not yet exercised

* In implementing the Finance law which came into effect on December 31, 2006 (the Balladur Amendment) relating to the adoption of special measures to either prohibit members of the board or senior management from exercising their options during the duration of their tenure or, by default, requiring them to hold all or a part of the shares issued upon exercise of such options which would have been issued to them after this date, the Board of Directors decided that Michel Landel, the only board member or senior manager holding such options, is required to hold, for the duration of his tenure, a number of shares issued upon exercise of options attributed under the January 16, 2007 plan, in an amount equal to 30% of his base salary at the date of exercise of such options.



Richard Macedonia

Clodine Pincemin

Damien Verdier


Exercise price in euro 47.00 options exercised in the Fiscal year 6,500 2,500

Expiration date Jan 10, 2007 options not yet exercised 0 0



Expiration date Jan 10, 2008 options not yet exercised 0


Exercise price in euro 24.00 options exercised in the Fiscal year 40,000 19,000 12,000

Expiration date Jan 26, 2009 options not yet exercised 0 0 0

Plan date Jun 12, 2003 options granted 15,000


Expiration date Jan 26, 2009 options not yet exercised 0
















Plan date Apr 24, 2007 options granted


Expiration date Apr 23, 2014 options not yet exercised



The table below shows options granted to and exercised by Executive Committee members under the stock incentive plans awarded by Sodexho Marriott Services (SMS Plans) between 1997 and 2001, as mentioned on pages 82-83.

Michel Landel

Richard Macedonia

Plan date Jun 08, 1998 remaining options 17,609 4,036

Exercise price in USD 38.8195 options exercised in the Fiscal year 4,036

Expiration date Jun 08, 2008 options not yet exercised 17,609 0

Plan date Nov 22, 1999 remaining options 55,607 0

Exercise price in USD 22.3391 options exercised in the Fiscal year 0

Expiration date Nov 22, 2009 options not yet exercised 55,607 0

Plan date Dec 15, 2000 remaining options 29,657 0

Exercise price in USD 28.1557 options exercised in the Fiscal year 0

Expiration date Dec 15, 2010 options not yet exercised 29,657 0

3.3 Sodexho Alliance stock options granted and exercised during the Fiscal year for the 10 employees (other than Senior Management) granted or exercising the highest number of options

Number of options granted during the Fiscal year

Exercise price in euro Date of exercise Plan date

Number of options exercised during the

Fiscal year

361,000

47.85

Jan 16, 2008-Apr 23, 2014

Jan 16, 2007

55.40 Apr 24, 2007

47.00

November 2006-Apr 2007

Jan 11, 2002

290,95024.00 Jan 27, 2003



3. Financial Communication

Investor Relations 90

Investor relations policy 90Annual Report 91Annual Shareholders’ Meeting 92Regular meetings and ongoing dialogue 92Delisting from the New York Stock Exchange 92Benefi ts of being a registered shareholder 93

Sodexho Alliance Shares 94

Capital 97

1. Sodexho: an independent Group 972. Controlling interests as of August 31, 2007 983. Stock market information 99


3. Financial CommunicationInvestor Relations

Investor Relations

Listening to our shareholders and the fi nancial communityTo respond more effectively to the expectations of individual and institutional shareholders, Sodexho Alliance endeavors to continuously improve its investor relations programs by developing new information channels and organizing regular meetings with shareholders.

The Group’s investor relations policy is based on four core principles:

equal treatment: All fi nancial press releases are issued simultaneously in real time to all our stakeholders, in both French and English;

regular reporting: The fi nancial information timetable is published to the financial community a year in advance, and updates are always available on the website at www.sodexho.com;

accessibility: Live webcasts of the annual shareholders’ meetings and earnings presentations are broadcast and maintains on the website. Releases of quarterly revenue fi gures are accompanied by conference calls, giving the fi nancial community rapid access to the information and an opportunity to question senior

•

•

•

management about performance. These conference calls are simultaneously broadcast over the internet as an “audio webcast” and during Fiscal 2008 will be archived on the Group’s website;

transparency: A broad range of corporate information, including the bylaws, Reference Document, Annual Report, Sustainable Development Report, Human Resources Report, Interim Report, press releases, a presentation of the Group, and share price trends, is posted on the website, www.sodexho.com. Sodexho also offers the fi nancial community a comprehensive package of dedicated, interactive communication channels. Financial press releases are issued via print media and e-mail in France and around the world.

•

INVESTOR RELATIONS POLICYD

In order to meet the Group’s own transparency goals and to comply with all applicable regulations in connection with its listing on the NYSE – Euronext Paris, Sodexho Alliance and all those involved in preparing the fi nancial information have committed to a set of core principles designed to ensure equal treatment of all shareholders.

Group spokespersonOnly the Chairman, the Chief Executive Officer and members of the Executive Committee have authority to provide fi nancial information. The Chief Executive Offi cer has appointed the Director of Investor Relations to act as offi cial spokesperson for the Group, with specifi c delegated powers.


Financial Communication 3.Investor Relations

Preparation of fi nancial informationAll fi nancial information is reviewed prior to publication by a Disclosure Committee comprising representatives from the Finance, Corporate Communications and Sustainable Development, Legal and Human Resources departments.

Publication of fi nancial informationWithout exception, all information liable to infl uence the share price is published before the Paris stock market opens for trading.

After approval by the Chief Executive Offi cer, the Chief Financial Offi cer or the Board of Directors (depending on the nature of the information), fi nancial information

is released to the markets via a press release, issued simultaneously to all sections of the fi nancial community and to the stock market authorities.

Financial information can be accessed at www.sodexho.com.

Sodexho Alliance does not publish any fi nancial information during the one-month period prior to publication of the interim and annual fi nancial statements.

Code of Conduct for Senior ManagersTo underscore Sodexho’s commitment to transparency and regulatory compliance, the Board of Directors in 2003 adopted a Code of Conduct for Senior Managers. The Executive Committee members and key fi nance executives of the Sodexho Group have signed up to this Code and agreed to abide by its principles.

How to obtain informationOn the Sodexho Alliance websitewww.sodexho.com

Voice server (if you are calling from France – French language only)Tel. +33 (0)8 91 67 19 66 (€0.225 per minute)

By phone or faxInvestor RelationsTel. +33 (0)1 30 85 72 03Fax +33 (0)1 30 85 50 88

By e-mailfi [email protected]

By mailSodexho Alliance, Investor Relations B.P. 100,78883 Saint-Quentin-en-Yvelines Cedex, France

From April 2008, please check our new directions on page 253.

ANNUAL REPORTD

This document is an English-language version of the Document de référence fi led with the Autorité des Marchés Financiers (AMF) in accordance with French stock market regulations. This French-language Document de Référence can be consulted on the AMF website (www.amf-france.org). It is also available, along with the English-language Reference Document, at www.sodexho.com.

Because Sodexho Alliance is no longer listed on the New York Stock Exchange as of July 16, 2007, we no longer publish an English-language Form 20-F under section 13 of the Securities Exchange Act of 1934, which had been fi led with the Securities and Exchange Commission (SEC). Nevertheless, the full text of the Forms 20-F through Fiscal 2006 are accessible via the EDGAR section of the SEC website (www.sec.gov) as will as the Sodexho website (www.sodexho.com).


3. Financial CommunicationInvestor Relations

ANNUAL SHAREHOLDERS’ MEETINGD

The Annual Shareholders’ Meeting is announced in offi cial notices published in the press and in the BALO (Bulletin of Compulsory Legal Notices) in France.

The agenda for the meeting is available in French and English at least 30 days before the meeting. It is sent to all registered shareholders, and to other shareholders on request.

A live webcast of the Sodexho Alliance Annual Shareholders’ Meeting is broadcast on our website, enabling shareholders who cannot attend in person to ask questions and to follow the meeting, including the voting on resolutions. Beginning with the annual shareholders meeting of January 2009, electronic voting will be implemented.

REGULAR MEETINGS AND ONGOING DIALOGUED

Sodexho Alliance is committed to genuine dialogue with its shareholders and with the broader fi nancial community.

The three milestones of the financial year are the publication of our interim and full-year results, and the Annual Shareholders’ Meeting. The Group also arranges quarterly conference calls at which fi nancial analysts can talk to the Chief Executive Offi cer and Chief Financial Offi cer.

An addition, the Chief Executive Offi cer and the Chief Financial Offi cer regularly meet investors in private or in group sessions in Europe (including Paris, London and Frankfurt) and in the United States (including New-York and Boston) as forums for more informal dialogue, and offer periodic special-interest briefi ngs to give analysts an insight into front-line operations (“investor days”). Sodexho also takes part periodically in industry presentations organized by brokerage fi rms.

DELISTING FROM THE NEW YORK STOCK EXCHANGED

The Board of Directors approved management’s recommendation to apply for voluntary delisting of its American Depositary Receipts (ADRs) from the New York Stock Exchange (NYSE) and voluntary deregistration under the U.S. Securities Exchange Act of 1934.

This decision was based on the fact that the ADR trading volume on the NYSE had remained very low since 2002 and had only accounted for approximately 1% of the total shares traded over the last fi ve years and approximately 3% of the average trading over the last twelve months. In addition, as Sodexho has adopted International Financial Reporting Standards (IFRS), it is no longer necessary to reconcile fi nancial statements to a second accounting

standard as Sodexho believes that the standards generally are equivalent in terms of quality of information for investors.

Sodexho maintained its ADR program as a “level one” program and the ADRs are traded on the Over the Counter (OTC) market.

Finally, Sodexho successfully complied with the requirements of Section 404 of Sarbanes-Oxley in its Form 20-F covering the fi scal year that ended August 31, 2006. Sodexho has continued its focus on the effectiveness of the Group’s internal controls and risk management processes.


Financial Communication 3.Investor Relations

Investor Diary DatesFirst quarter revenues January 9, 2008

Annual Shareholders’ Meeting January 22, 2008

Payment of dividend February 4, 2008

First-half revenues April 2, 2008

Interim results April 17, 2008

Nine-month revenues July 2, 2008

Full-year revenues October 1, 2008

Full-year results November 7, 2008

Annual Shareholders’ Meeting January 20, 2009

These dates are purely indicative, and may be subject to change without notice. Regular updates are available on our website, www.sodexho.com.

BENEFITS OF BEING A REGISTERED SHAREHOLDERD

Registered shareholders do not have to pay custody fees, are automatically invited to shareholders’ meetings, and receive regular news updates about Sodexho.

Our registered shareholders’ accounts are managed by Société Générale, which also acts as transfer agent for all Sodexho Alliance shares.

ContactsFor further information call:

Société Générale Nantes (France) : +33 (0)2 51 85 52 47

Sodexho Alliance: +33 (0)1 30 85 72 03

or visit the Société Générale website: www.nominet.socgen.com.


3. Financial CommunicationSodexho Alliance Shares

Sodexho Alliance Shares

Sodexho Alliance shares are listed on List A of Eurolist by NYSE-Euronext Paris (Euronext code: FR 0000121220), and are included in the Next 20 Index. Since as a result of its voluntary delisting from the New York Stock Exchange, Sodexho Alliance American Depositary Receipts (ADRs) are traded on the over the counter (OTC) market, ticker SDXAY, each ADR representing one Sodexho Alliance share.

ADJUSTED SODEXHO ALLIANCE SHARE PRICE TRENDSFrom initial listing through August 31, 2007 (in euro)

* Trends of Sodexho Alliance share based on trend of CAC 40 index.

Source: Sodexho

The initial listing was on March 2, 1983 at an adjusted price of 1.55 euro. As of August 31, 2007, the closing share price was 48.38 euro. Over the period, the value of the share has multiplied by 31, while the CAC 40 has multiplied by 15.2

representing a progression by Sodexho Alliance of 2 times that of the CAC 40. Since being listed on the stock exchange the Sodexho Alliance share has on average, and excluding dividends, increased by 15.1%.


Financial Communication 3.Sodexho Alliance Shares

ADJUSTED SODEXHO ALLIANCE SHARE PRICE TRENDSFrom September 1, 2006 through August 31, 2007 (in euro)

* Trends of Sodexho Alliance share based on trend of CAC 40 index.

Source: Sodexho

During the last calendar year, the shares of Sodexho Alliance increased by 16.4% while the increase in the CAC 40 over the same period was 9.6%. As of August 31, 2007 the market capitalization of Sodexho Alliance totaled 7.7 billion euro.

ADJUSTED SODEXHO ALLIANCE SHARE PRICEFrom September 1, 2006 through August 31, 2007 (in euro)

Price at September 1, 2006 41.57

12-month low 40.61

12-month high 59.71Price at August 31, 2007 48.38

AVERAGE DAILY TRADING VOLUME OF SODEXHO ALLIANCE SHARE

Volume 488,574

Value (in euro) 24,761,000

Source: Euronext

ADJUSTED SODEXHO ALLIANCE ADR* PRICEFrom September 1, 2006 to August 31, 2007 (in USD)

Price at September 1, 2006 53.20

12-month low 52.51

12-month high 80.73

Price at August 31, 2007 65.75

AVERAGE DAILY TRADING VOLUME OF SODEXHO ALLIANCE ADRs

Volume 18,821

Value (in USD) 1,319,890

Source: Bank of New York Mellon

* ADRs were listed on the NYSE from September 1, 2006 to July 15, 2007. As of July 15, 2007, ADRs have been traded on the OTC market.


3. Financial CommunicationSodexho Alliance Shares

DIVIDEND

In euro Fiscal 2007 Fiscal 2006 Fiscal 2005 Fiscal 2004

Total payout 182,880,375* 151,075,092 119,269,810 111,318,489Number of shares entitled to dividend 159,026,413 159,026,413 159,026,413 159,026,413Net dividend per share 1.15 * 0.95 0.75 0.70

* Subject to approval at the Annual Shareholders’ Meeting on January 22, 2008.

EARNINGS PER SHARE(1)

NET DIVIDEND PER SHARE(2)

In euro Fiscal 2007 Fiscal 2006 Fiscal 2005 Fiscal 2004

Earnings per share 2.22* 2.07* 1.36* 1.15**

Net dividend per share 1.15 0.95 0.75 0.70

(1) Based on quaterly average number of shares outstanding.(2) Based on the number of shares outstanding at August 31.* Calculated under IFRS.** Calculated under French GAAP.

DIVIDEND AND YIELD FOR FISCAL 2007

Dividend* EUR

Yield based on share price at August 31, 2007 2.4%

* Subject to approval at the Annual Shareholders’ Meeting on January 22, 2008.

Dividends not claimed within 5 years of the date on which they were payable to shareholders are forfeited and remitted by Sodexho Alliance to the Caisse des Dépôts et Consignations.


Financial Communication 3.Capital

CapitalCHANGES IN ISSUED CAPITALFrom September 1, 2006 through November 15, 2007

Number of sharesTotal issued capital (in

euros)

At September 1, 2006 159,026,413 636,105,652

At November 23, 2007 159,026,413 636,105,652

1. SODEXHO: AN INDEPENDENT GROUP

Sodexho is still an independent group.

On August 31, 2007, Sodexho Alliance had 52,675 shareholders. Of these, 27,284 were members of our employee stock ownership plans.

Our shares are owned by:

Bellon SA 36.8%

Employees 0.7%

Treasury shares 1.9%

French shareholders 24%

Individual 4%

Institutional 20%

Non-French shareholders 37%

Shareholders identifi ed as of August 31, 2007

Number of shares% of issued

capitalNumber of voting

rights % of voting rights

Bellon SA 58,572,917 36.83% 79,539,208 43.78%

Arnhold and S. Bleichroeder Advisers 9,917,266 6.24% 9,917,266 5.46%

Caisse des Dépôts et Consignations 4,389,190 2.76% 6,702,118 3.69%

Employees 1,135,449 0.71% 2,135,809 1.18%

Treasury shares 3,089,613 1.94% - -

Public 81,921,978 51.52% 83,365,351 45.89%

TOTAL 159,026,413 100.00% 181,659,752 100.00%

The difference between percentage interests in the share capital and the percentage of voting rights arises because:

the company’s bylaws confer double voting rights on registered shares held by the same shareholder for at least four years;

treasury shares are denied voting rights by law.

•

•

Collectively, members of the Board of Directors and Senior Management directly hold less than 0.5% of the share capital of Sodexho Alliance. During Fiscal 2007, except for transactions disclosed on page 64, none of these individuals disclosed to the Company that he or she had traded, directly or through related persons, in Sodexho Alliance shares.


3. Financial CommunicationPrincipal Shareholders

As of the date of the Reference Document, Sodexho Alliance is not aware of:

any other shareholder holding 2.50% or more of the capital or voting rights of Sodexho Alliance directly, indirectly or in concert;

any shareholders’ pact or other agreement which, if implemented, could result in a change of control of Sodexho Alliance.

•

•

Agreements contracted other than on an arm’s length basis and in the ordinary course of business between Sodexho Alliance and members of the Board of Directors or Senior Management or any shareholder holding more than 10% of the voting rights of Bellon SA are described on page 65 of the Reference Document.

2. CONTROLLING INTERESTS AS OF AUGUST 31, 2007


Financial Communication 3.Principal Shareholders

3. STOCK MARKET INFORMATION

Sodexho Alliance sharesSodexho Alliance shares are listed on Eurolist by NYSE-Euronext Paris, where they are traded individually under Euroclear code FR 0000121220.

As of August 31, 2007, Sodexho Alliance had a Standard and Poor’s rating of BBB+/A-2.

TRADING VOLUMES AND SHARE PRICE TRENDS

Date

Share price (euros) Average daily trading volume(in thousand of euro)high low average*

2006

May 39.75 34.05 36.75 20,170

June 37.85 33.11 35.36 15,723

July 40.00 37.01 38.58 19,426

August 42.09 38.60 40.35 12,506

September 44.65 40.61 42.60 16,184

October 44.15 41.48 42.86 13,751

November 45.10 41.65 43.69 15,060

December 47.59 43.59 45.79 16,769

2007

January 55.45 47.09 51.52 31,748

February 56.82 50.35 54.93 41,060

March 55.89 51.21 53.61 23,603

April 59.71 54.61 56.22 29,546

May 59.00 54.94 57.15 23,730

June 56.53 50.60 53.55 28,216

July 55.07 47.10 51.95 28,501

August 49.26 42.50 47.07 29,556

September 50.28 45.01 47.65 24,472

October 51.94 46.20 48.68 25,172

* Monthly average of closing prices.



4. Consolidated Information

Activity Report Fiscal 2007 102

Highlights 1021. Key Figures for Fiscal 2007 1042. Financial Position as of August 31, 2007 1103. Outlook for Fiscal 2008 and the medium term 111

Consolidated Financial Statements for the Year Ended August 31, 2007 113

1. Consolidated income statement 1132. Consolitated balance sheet 1143. Consolidated cash fl ow statement 1164. Statement of recognized income and expense 117

Notes to the Consolidated Financial Statements 118

Statutory auditors’ report on the consolidated fi nancial statements 177Supplemental information on the consolidated fi nancial statements 178

Employment and Environmental Information 181

1. Employment Information 1812. Environmental Information 187


4. Consolidated InformationActivity Report Fiscal 2007

Activity Report Fiscal 2007

At the Board of Directors meeting held on November 13, 2007, Michel Landel presented to the Directors the good performance achieved by the Group for Fiscal 2007.

HIGHLIGHTSD

In order to become the premier global outsourcing expert in Quality of Life services, Sodexho launched “Ambition 2015” two years ago. In line with the ambition of doubling Fiscal 2005 revenues in ten years, signifi cant progress in implementing the Group’s strategic imperatives was made during Fiscal 2007.

Accelerate profi table organic growthOrganic growth reached 8.4% in Fiscal 2007, representing an improvement of four percentage points in two years. All segments of the Food and Facilities Management Services and Service Vouchers and Cards activities contributed to this performance.

Improve operating profi ts, margins and cashLargely as a result of the turnaround of Sodexho’s UK operations, better management control in the Rest of the World and strong growth in issue volumes in the Service Vouchers and Cards activity, operating profi t rose by 14.5% at constant exchange rates and excluding the impact in Fiscal 2006 of the gain on disposition of the Spirit Cruises river and harbor cruise subsidiary and the fi nal release of the provision for the U.S. litigation.

Initiatives to improve site productivity (by managing food and labor costs), implemented across all geographies, allowed Sodexho not only to reinvest in the resources needed to secure our future growth, in particular, human resources, but also to improve consolidated operating margin.

Net cash provided by operating activities totaled 753 million euro, 54.3% higher than in Fiscal 2006, once again demonstrating the Group’s excellent fi nancial model.

Live our valuesSodexho has put in place a range of global and local initiatives to strengthen the commitment of its people to the Group’s core values (service spirit, team spirit and the spirit of progress) responsible for Sodexho’s success.

Sodexho continues to act as a responsible corporate citizen and social and environmental criteria are embedded in its policies and programs. As such, in France, Sodexho obtained ISO 9001 certification – V. 2000 in all medical and welfare establishments where the Group provides Food and Facilities Management services, as well as for its remote site operations in Algeria, India, Indonesia and Norway. Sodexho has also obtained ISO 14001 certifi cation for Facilities Management services at the International School in Hong Kong.

Since 2006, Sodexho has published an annual Sustainable Development Report (available on www.sodexho.com).

In Fiscal 2007, Sodexho Alliance was included in four indices specialized in responsible social investment: FTSE4Good, ASPI Eurozone, Dow Jones Sustainability World Index, and Dow Jones Stoxx Sustainability Index (Europe). For the third consecutive year, Sodexho has also been named “Supersector World Leader” in the Travel and Leisure Category. According to the SAM Group (the DJSI’s rating agency), “Sodexho’s performance has been remarkable, testifying to a clear business philosophy and great transparency.”


Consolidated Information 4.Activity Report Fiscal 2007

Ensure compliance through reinforced standards, risk management, business rigour and best practices At the beginning of fi scal 2007, Sodexho became one of the fi rst groups outside the United States to prepare a report on internal control over its fi nancial statements. This initiative, part of the CLEAR project (Controls for Legal Requirements to enhance Accountability and Reporting) launched in 2003, continued in Fiscal 2007 and was extended to cover operational controls within many subsidiaries.

Sodexho’s Health, Safety and Environment practices have been recognized by ExxonMobil in Australia; the Chilean Safety Association, Antofagasta Minerals and the Anglo American mining company in Chile; Goro Nickel in New Caledonia; Techint in Peru; on Sakhalin Island (Russia); and by awards from RoSPA (Royal Society for the Prevention of Accidents) and the British Safety Council in the United Kingdom.

Sodexho is also actively promoting the sharing of best practices within the Group. Examples include the “Click-and-Buy” web application, designed to improve purchasing effi ciency, which is being rolled out in six countries in Continental Europe, including France, Germany and the Netherlands. In the foodservice offer, the innovative “Vitality” range of appetizing, balanced meals prepared using original recipes with high-quality local produce – originally developed by Sodexho Sweden – was adopted by subsidiaries in Austria and Morocco, and is now being implemented in Finland, France, Italy, the Netherlands, Portugal and the Czech Republic.

Create a competitive advantage through our people and their diversityThe Group’s objective is to be recognized for its ability to attract, develop, motivate and retain its people, as well as for its commitment to diversity and integration. Numerous worldwide and local initiatives have been developed within the Group. For example:

the “Fundamentally Sodexho” training program, provided to the Group’s 250 principal executives, was followed up with a second one-week module. With a focus on strategic marketing and human resource management, this module was conceived by the Sodexho Management Institute, in partnership with the University of Chicago Graduate School of Business;

•

in February 2007, more than 50 female executives participated in the first Sodexho Global Women’s Summit, to share their vision on diversity and the role of women in the Group and ways it might be strengthened. Recommendations were presented to the Group’s Executive Committee and an action plan has been developed;

in the United States, Sodexho continues its mentor program. This program’s objective is to give individuals seeking advancement the opportunity to have access to an internal mentor for one year. In Fiscal 2007, 105 employees benefi ted from this program, which will be developed in other countries as well as for expatriate employees;

in France, Sodexho put in place qualified training courses in which nearly 500 employees participated this year. These “Professionalization Sessions” allowed employees to obtain a certificate of professional qualifi cation. “Sodexho Formation” (Sodexho training) is the only organization in the French food service sector which is accredited to provide this training.

Lastly, at the end of Fiscal 2007, Michel Landel proposed adding a sixth strategic imperative: “To transform the Sodexho brand into the benchmark for Quality of Life services.” The Group confi rms its intention to continue to pursue the achievement of these strategic imperatives.

Delisting from the New York Stock ExchangeOn July 16, 2007, Sodexho voluntarily delisted from the New York Stock Exchange (NYSE). The company’s American Depositary Receipts (ADRs) are now traded over the counter. This decision to delist was made for the following reasons:

Sodexho is listed on Euronext (now part of the NYSE-Euronext group), which on average accounted for approximately 97% of trading in the company’s shares over the past twelve months. Since 2002, the volume of trading in Sodexho ADRs has remained very low, representing only around 1% of total volumes traded over the past fi ve years;

As the Group has adopted International Financial Reporting Standards (IFRS), it no longer appears necessary to reconcile its consolidated financial statements with a second set of generally accepted accounting practices, given that Sodexho already provides investors with a broadly equivalent standard of fi nancial information.

Finally, Sodexho had already complied with Section 404 of the Sarbanes-Oxley Act when it fi led its Fiscal 2006 Annual Report on Form 20-F. The Group is commited to pursue its goal of improving internal control and risk management procedures by implementing targeted initiatives.

•

•

•

•

•



1. KEY FIGURES FOR FISCAL 2007

Sodexho’s 28,896 sites comprise:

16,602 business and industry sites (including leisure, defense and correctional facilities);

4,824 schools, colleges and universities;

•

•

3,324 healthcare sites;

2,765 seniors sites;

1,381 remote sites.

Sodexho has operations in 80 countries and employed 342,380 people as of August 31, 2007.

•••

1.1 Consolidated income statementThe fi nancial statements for Fiscal 2007 were prepared in accordance with International Financial Reporting Standards (IFRS).

(in millions of euro) Fiscal 2007 Fiscal 2006Change at current

exchange ratesChange at constant

exchange rates

Revenues 13,385 12,798 4.6% 8.3%

Cost of sales (11,396) (10,957)

Gross profi t 1,989 1,841 8.1% 11.2%

Sales department costs (174) (159)

General and administrative costs (1,181) (1,104)

Other operating income and charges 6 27

Operating profi t 640 605 5.7% 9.2%

Net fi nancing costs (100) (108)

Share of profi t of associates 7 8

Profi t for the period before tax 547 505 8.3% 12.0 %

Income tax expense (184) (172)

Profi t for the period 363 333

Profi t attributable to minority interests 16 10

Profi t attributable to equity holders of the parent 347 323 7.5% 11%

Diluted earnings per share (in euro) 2.22 2.07 7.5% 11%

The currency impact is calculated by applying the average exchange rates for the previous fi scal year to the current fi scal year fi gures. In Fiscal 2007, the effect of movements in the exchange rate of the US dollar against the euro

was (434) million euro on revenues, (17) million euro on operating profi t and (9) million euro on profi t attributable to equity holders of the parent.



1.1.1 Changes in scope of consolidationThe main recent changes in the scope of consolidation are listed below:

August 2006: sale of Spirit Cruises, a U.S.-based river cruise and harbor business;

October, 2006: acquisition of 100% of OCDN (Off Campus Dining Network), a U.S. company offering services to university students;

January 2007: acquisition of 54% of Gastro-Kanne (Germany), a company specializing in foodservices for the healthcare segment;

June 2007: acquisition of 100% of Vivaboxes (Belgium), a company which has developed an innovative gift voucher concept.

1.1.2 Revenues: acceleration of growthSodexho’s revenues increased by nearly 587 million euro to 13,385 million euro over the prior year.

This increase in revenues comprises the following:

organic growth: +8.4%;

currency impact: -3.7%;

changes in scope of consolidation: -0.1%.

Sodexho continued to implement its strategy during fi scal 2007, achieving:

a client retention rate of 93.9% (+0.1%), in line with Fiscal 2006. Good progress was made in North America, where the Group’s 95% target was exceeded. Client retention also improved in Continental Europe. However, the effect was offset by contract expirations in Remote Site Management and the United Kingdom’s retention rate, which is still too low;

revenue growth on existing sites was over 5%, about two-thirds of which resulted from implementation of contractual indexation terms, especially in North and Latin America;

•

•

•

•

•••

•

•

business development remained above 9%, refl ecting good performances in all regions.

Consequently, Sodexho reported numerous advances in organic growth throughout the Food and Facilities Management Services activity, including:

a rebound in organic growth in North America, (up 8.8%), refl ecting acceleration across all segments;

substantial expansion in Facilities Management services in Continental Europe, resulting in organic growth of 5.1%;

confi rmation of a return to growth in United Kingdom operations (up 6.1%);

continuation of strong activity in the Rest of the World (up 15.3%), with growth in Latin America, Asia, Australia and in Remote Sites.

The Service Vouchers and Cards business also confi rmed its dynamic growth profi le, with organic revenue growth of 20.1%.

1.1.3 Growth in operating profi tOperating profi t rose by 5.7% to 640 million euro over the prior year.

Fiscal 2006 operating profit included two one-time items:

a gain of 21 million euro on the disposition of Spirit Cruises, a U.S.-based river and harbor cruise business;

a release of the 7 million euro provision for the U.S. litigation, following fi nal resolution of the case.

Excluding these items, operating profi t rose by 10.9% at current exchange rates and by 14.5% at constant exchange rates, exceeding the targets set by the Group at the beginning of the fi scal year.

Operating margin was 4.8%, compared with 4.7% in Fiscal 2006 (or compared to 4.5% after excluding in the prior year the gain on the disposition of Spirit Cruises and the release of the provision for the U.S. litigation).

•

•

•

•

•

•

•



1.2 Analysis of trends in revenues and operating profi t by activity

Revenues by activity (in millions of euro) Fiscal 2007 Fiscal 2006

Change at current exchange rates

Change at constant exchange rates

Food and Facilities Management Services

North America 5,492 5,479 0.2% 8.0%

Continental Europe 4,388 4,148 5.8% 5.6%

United Kingdom and Ireland 1,475 1,370 7.7% 6.1%

Rest of the World 1,591 1,434 10.9% 15.6%

TOTAL 12,946 12,432 4.1% 7.9%

Service Vouchers and Cards 447 373 19.7% 22.3%

Elimination of intragroup revenues (8) (6)

TOTAL 13,385 12,798 4.6% 8.3%

Operating profi t by activity (in millions of euro) Fiscal 2007 Fiscal 2006

Change at current exchange rates

Change at constant exchange rates

Food and Facilities Management Services

North America 253 277 (8.7%) (1.6%)

Continental Europe 214 203 5.1% 4.9%

United Kingdom and Ireland 72 42 72.6% 70.0%

Rest of the World 41 28 49.1% 59.2%

TOTAL 580 550 5.4% 9.3%

Service Vouchers and Cards 135 113 19.3% 22.6%

Corporate expenses (75) (58) (29.5%) (36.0%)

TOTAL 640 605 5.7% 9.2%

In fi scal 2007, activities located outside the euro zone represented 70% of revenues (including 40% in US dollars) and 82% of operating profi t (including 40% in US dollars).

1.2.1 Food and Facilities Management Services

This activity contributed 96.7% of consolidated revenues and 81.1% of consolidated operating profi t before corporate expenses.

Revenues totaled 12,946 million euro, confi rming Sodexho’s market leadership as growth accelerated to 8.1%, notably as a result of the following:

continued strong progress in Healthcare and Seniors (up 9.0%);

accelerated growth in Business and Industry (up 8.1%);

a good performance in Education (up 7.0%).

Operating profi t was 580 million euro, an increase of 5.4% at current exchange rates and 9.3% at constant exchange rates.

•

•

•

Analysis by region

North AmericaRevenues in North America were 5.5 billion euro. The effect of the unfavorable trend in the average exchange rate of the US dollar against the euro year-on-year is purely a translation effect, with no associated operational risk. However, this currency effect masks the substantial progress made during Fiscal 2007, with organic growth up sharply from 5.0% in Fiscal 2006 to 8.8% in Fiscal 2007.

Comparisons between Fiscal 2007 and Fiscal 2006 also include the effect of a 53rd week of activity in Fiscal 2007 as a result of the 52/53 week calendar used by Sodexho in North America, in line with industry practice. This 53rd week had an estimated effect of about 1.2% on Fiscal 2007 organic revenue growth.

The “Clients for Life”® client retention program, pursued intensively in North America in recent years, translated into a record client retention rate overall and in almost all segments.



The Business and Industry segment (8.9% organic growth) benefi ted from many favorable factors:

substantial growth in the client retention rate;

solid business development across all Foodservices and Facilities Management activities, with a number of major contracts awarded during the year including Pfi zer, Sanofi -Aventis, the Houston Zoo, and Wellpoint, Inc;

the start-up of a major new contract with Nova Gold in the Canadian mining industry at the end of the fi scal year.

Organic growth of 10.1% in Health Care and Seniors was mainly driven by:

excellent client retention;

revenue growth on existing sites, a result of the extensive offerings which were well adapted to the expectations of clients, patients and visitors and to increasing revenues from contracts won in previous years (Memorial Hermann Healthcare System and New York City Health and Hospital Corporation);

new contracts awarded in Fiscal 2007 include York Central Hospital (Ontario, Canada: Foodservice and Facilities Management), Stanford University Medical Center (Palo Alto, California: Facilities Management), Moses Cone Health Center (Greensboro, North Carolina: Foodservice and Facilities Management), St John’s Hospital (Springfi eld, Illinois) and McAllen Medical Center (McAllen, Texas).

Education reported organic growth of 7.6%, and continues to benefi t from increased student enrollment in universities, strong client retention, and demand for Facilities Management services.

Major contracts won in Fiscal 2007 include the University of Illinois in Chicago, the State University of New York (Buffalo, New York: Facilities Management), Gary Community School Corporation (Gary, Indiana), Rensselaer Polytechnic Institute (Troy, New York: Facilities Management), Northern Arizona University Conference Center (Flagstaff, Arizona) and Recovery School District (New Orleans, Louisiana: Facilities Management).

Of the many accolades received by Sodexho, highlights included the prestigious Pro Patria Award from the U.S. Defense Department and the Freedom Award from the Federal government. Sodexho was also a fi nalist in the Spirit Award 2007 for Recruitment, Development and Retention awarded by the National Restaurant Association Educational Foundation.

Operating profi t was 253 million euro, a decrease of 1.6% at constant exchange rates compared to the prior year. However, excluding the gain from Spirit Cruises and release of the provision for the U.S. litigation the operating result shows an increase of 9.6% at constant exchange rates. The operating margin was 4.6%.

Despite productivity gains recorded on labor costs, particularly in Education and Corporate Services, and improved operational performance in Defence, the increase was limited by:

••

•

••

•

The impact of a 53rd week of activity had no signifi cant effect on operating profi t because of start-up costs related to the start of the academic year;

Signifi cant infl ation on some food products.

With this strong performance Richard Macedonia retired as Chief Executive Offi cer of Sodexho in North America on August 31, 2007 after 39 years with the company. George Chavel, previously the President of the Healthcare and Seniors Division, was appointed as Chief Executive Offi cer, Food and Facilities Management Services for North America effective September 1, 2007.

Continental EuropeIn Continental Europe, revenues totaled 4.4 billion euro and organic growth reached 5.1%.

Fiscal 2007 was notable for two major new contract wins (a Facilities Management contract with KLM in the Netherlands, and the foodservice contract at the Eiffel Tower in Paris), and for increasingly strong growth in Central Europe.

Sodexho obtained two fl agship awards for promoting diversity in business: the Innovation Award at the 2006 Corporate Diversity Awards, sponsored by the French government, and the Equality Diversity award from the Belgian federal government.

Other accolades included the 2007 Demos Group Silver Trophy, in recognition of Sodexho’s initiatives under the law for Individual Training Rights in France; ISO 9001 certifi cation for Facilities Management activities in the Netherlands; and a ranking in the top 10 employers in Germany by the Geva Institute.

The Business and Industry segment reported organic growth of 4.3%, refl ecting:

continued strong growth in Spain and Central Europe and in the Defense segment in Sweden for both Food and Facilities Management services;

more modest performance in countries such as Italy and the Netherlands, linked to the economic environment and the rigorous application of a profi table growth approach to sales;

revenues from the two major new contracts won by Sodexho: KLM (36 Food and Facilities Management Services operations in 90 buildings at Schiphol airport in the Netherlands) and a complete foodservice solution at the Eiffel Tower in Paris.

Other signifi cant new contracts in Fiscal 2007 include IBM (Czech Republic and Denmark), Nordea (Denmark), BMS (Italy), Volvo Cars and Eksjö Garrison (Sweden), BPS Westpoint (Netherlands), and Galeries Lafayette, BHV and the Defense Procurement Agency (DGA) in France.

The organic growth of 6.6% in Healthcare and Seniors refl ected:

the breadth of the service offering; and

strong business development in the prior fi scal year.

•

•

•

•

•

••



New contracts won include UZ Gand (Belgium), Hospital Del Sureste (Spain) and the Pole Santé Léonard de Vinci (France).

The 6.0% growth achieved in Education was largely due to improved client retention, as Sodexho continues its selective approach to public sector contracts.

New clients in Fiscal 2007 include the Technical University of Delft and the Avans Hogeschool in the Netherlands, Dresden Fraichaud CCS in Germany, and the public schools of Troyes in France.

Fiscal 2007 operating profit for Continental Europe was 214 million euro, an increase of 4.9% before currency effects. Further productivity initiatives in purchasing and labor costs helped to offset infl ation on certain Food products. Investment in human resources was intensifi ed to accelerate medium-term business development . Operating margin was in line with Fiscal 2006 at 4.9%.

United Kingdom and Ireland

Revenues in the United Kingdom and Ireland were 1.5 billion euro and organic growth rose to 6.1% (versus 4.8% in Fiscal 2006), confi rming the subsidiary’s return to growth.

Organic growth in the Business and Industry segment was 6.8%, refl ecting:

relatively stable demand from corporate clients;

the full-year impact of contracts awarded in Fiscal 2006 in Defense, such as Catterick Garrison and the logistic support for the Royal Navy Base;

robust activity in leisure and events during the summer months.

Contracts awarded in Fiscal 2007 include GSK (Ware), Dell (Glasgow), United Biscuits, Astrium, the World Scouts Jamboree (Chelmsford) and the UK sovereign base on Cyprus.

At the end of Fiscal 2007, Sodexho’s UK-based Leisure teams swung into action for the September 7 start of the hospitality contract for the Rugby World Cup, which will have an impact in the fi rst quarter of Fiscal 2008.

In Education, Sodexho won contracts with the University of Bedfordshire and Altrincham Girls School (Cheshire).

••

•

Healthcare and Seniors registered organic growth of 7.9%, driven by:

improved client retention;

the full ramp-up of contracts opened in Fiscal 2006, notably, recent Private Finance Initiative (PFI) contracts which attained their normal activity levels;

accelerated new business development, with the signing of important contracts with North Staffordshire Hospitals (Facilities Management) and with the Nuffi eld group, a market leader in private hospitals (Foodservice).

Operating profi t was 72 million euro, and operating margin was 4.9% compared with 3% in Fiscal 2006. The operating margin in the United Kingdom and Ireland has now reached the Group average, meeting the recovery objectives set three years ago.

This excellent performance refl ects the effectiveness of measures initiated in recent years: tighter management at site level, focusing principally on food and labor costs; strict application of the “Right Clients Right Terms”® in all new business development; and close control of administrative costs, in particular with the creation of a Shared Services Center.

Rest of the WorldIn the Rest of the World, revenues totaled 1.6 billion euro. Organic growth was 15.3%, and was driven mainly by:

double-digit growth in all regions (Latin America, Asia and Australia) and in Remote Site activities;

high commodity prices, which continued to fuel robust revenue growth from existing sites, especially in the Middle East, Africa and Australia, and in the mining sector in Latin America.

Among the year’s achievments were the award of the IBM Facilities Management contract in India, the success of the Sodexho Management Academy in China, advances in food purchasing productivity in Latin America through the “Five Star” program, and the contribution made by the Remote Site teams to economic development in Madagascar via its support for clients’ sustainable development projects.

During Fiscal 2007, Sodexho won numerous contracts including Glencore in Colombia, Dubai World, Red Sea Housing Services in Saudi Arabia, Peabody (North Goonyella Coal Mines) in Australia, Unilever and Petrobras Revap (Sao José dos Campos) in Brazil, CMPC Celulosa in Chile, Procter & Gamble at Medellin in Colombia, Pluspetrol in Peru, Universidad Santo Tomas Santiago in Chile, and the Singapore American School.

••

•

•

•



Expansion of Sodexho’s operations in China and India continued at a rapid pace, in both Food and Facilities Management Services. Among the signifi cant contracts won were:

in China: Dow Chemical R&D Center, General Electric (China Technology Center), Johnson Health Tech. Co (Shanghai), Tianjin Faw Toyota Motor, Takaoka Lioho Tianjin Industries Co, Qingheyuan Cherish-Yearn Seniors Home and Nokia (Beijing);

in India: IBM India (11 sites), FLAME (Pune), and Cisco Systems (Bangalore).

Sodexho received numerous accolades including the Distinguished Defense Partner Award of the Singapore Civil Defense Authority, the “Prémio Top Hospitalar 2006” award in Brazil, the Peruvian Service Company of the Year award from the Civil Association, and the Companies of Excellence award given by the highly prestigious China Cuisine Association.

The increase of over 50% in operating profi t to 41 million euro generated an improvement in operating margin, up from 1.9% in Fiscal 2006, to 2.6%. This strong performance is attributable largely in part to more rigorous management in Remote Sites.

Sodexho continues to invest in human resources and support functions in China and India, through initiatives such as the Sodexho Management Academy in China, which has already provided training to nearly 650 employees.

Finally, it should be noted that an asset impairment relat ing to the Sydney Olympic Stadium contract in Australia, weighed on the operating profi t in the prior fi scal year .

1.2.2 Service Vouchers and CardsRevenues for Fiscal 2007 totaled 447 million euro, with organic growth of 20.1%. Driven by Latin America, and in particular by Venezuela, issue volume (face value multiplied by the number of vouchers and cards issued) was 7.5 billion euro, an increase of 18.5% at constant consolidation scope and exchange rates.

Demand for traditional services (Restaurant Pass and Food Pass) remained very buoyant in Latin America. Growth in the region again topped 20% due to increases in face value and in the number of benefi ciaries.

•

•

Other highlights of Fiscal 2007 included building an issue volume of around 800 million euros in the rapidly-expanding gift voucher market (especially in Europe), and winning the prestigious Fundacio La Caixa contract in Spain. The eighth largest non-profi t organization in the world, the Fundacio campaigns against poverty among the young. The four-year contract is part of a program enabling families to provide aid to children in the form of products (such as food and clothing) or services (baby-sitting, childcare, counseling). It will touch 100,000 families.

New contracts gained during Fiscal 2007 include Coca-Cola (Food Pass) in Argentina, KBC Bank (Food Pass) in Belgium, Secretaria Municipal de Saude (Gift Pass) and Secretaria de Estado da Educaçao de Minas Gerais (Food Pass) in Brazil, Microsoft (Food Pass) in China, Adecco (Gift Pass) in France, the national Customs headquarters (Food Pass) in Hungary, Oracle (Food Pass) in India, Hewlett Packard (Gift Pass) in the Philippines, Coca-Cola (Gift Pass) in Poland and Venevision (Food Pass) in Venezuela.

Operating profi t rose by 22.6% to 135 million euro at constant exchange rates. At 30.3%, operating margin was in line with the prior-year fi gure, refl ecting:

strong growth in issue volumes, particularly in Latin America; and

the settlement of the dispute with a mutual fund following the insolvency in 2003 of a bank in Latin America;

increased investment in development, notably in strategy, marketing and innovation.

•

•

•



1.2.3 Corporate expensesCorporate expenses were 75 million euro, an increase of 17 million euro from the prior year. This represents 0.5% of consolidated revenues, which is very low for a group the size of Sodexho.

This increase reflects initiatives taken by senior management to:

leverage Group-wide scale effects by pooling marketing, international business development,purchasing and training efforts;

introduce new web-based performance monitoring and fi nancial reporting tools.

1.3 Net fi nancing costsNet fi nancing costs were 100 million euro, 7.4% lower than in Fiscal 2006 (108 million euro). The year-on-year change mainly resulted from an improvement in interest expense (6 million euro) arising from ongoing debt reduction.

Interest cover (the ratio of operating profi t to net interest expense) was 7.2, versus 6.3 in Fiscal 2006.

1.4 Income tax expenseIncome tax expense totaled 184 million euro, and the effective tax rate was 34.2% (versus 34.6% in Fiscal 2006). This is the second consecutive year in which Sodexho has reported a low effective tax rate, as a result of the reimbursement of withholding taxes under international tax treaties.

•

•

1.5 Substantial increase in profi t attributable to equity holders of the parent

Profi t attributable to equity holders of the parent totaled 347 million euro, an increase of 7.5%, or 11% excluding currency effects (17.6% excluding the impacts of the Spirit Cruises disposition and the U.S. litigation in Fiscal 2006).

This substantial increase was primarily attributable to:

the strong growth in operating profi t;

lower fi nancing costs, refl ecting ongoing debt reduction during the fi scal year;

the effective tax rate maintained below 35%.

1.6 Growth in earnings per shareBasic earnings per share for Fiscal 2007 was 2.22 euro, an increase of 7.5 % compared with Fiscal 2006 basic earnings per share of 2.07 euro.

••

•

2. FINANCIAL POSITION AS OF AUGUST 31, 2007

Presented below are the key components of the consolidated cash fl ow statement.

Year ended August 31

2007 2006

Net cash provided by operating activities 753 488

Net cash used in investing activities (221) (210)

Net cash used in fi nancing activities (144) (179)

Change in net cash and cash equivalents 388 99



Net cash provided by operating activities totaled 753 million euro in Fiscal 2007, compared with 488 million euro in Fiscal 2006. Factors underlying the 265 million euro year-on-year increase include:

the increase of 35 million euro in operating profi t;

a marked improvement of 188 million euro in working capital variations, resulting from a two-day improvement in client day receivables, cash advances received in connection with the 2007 Rugby World Cup contract, and high issue volumes in Service Vouchers and Cards in the fi nal months of the fi scal year.

Net cash provided by operating activities was partly used to fi nance:

net capital expenditures and investments of 208 million euro (1.5% of revenues);

acquisitions (net of divestments and of cash held by acquirees) of 15 million euro. The main acquisitions were 100% of OCDN (Off Campus Dining Network), which provides services to students on university campuses in the United States; and 100% of Vivaboxes (in Belgium), which has developed and sells an innovative gift voucher and gift pack concept.

Items included in net cash used in fi nancing activities include the dividend payout of 159 million euro.

As of August 31, 2007, borrowings totaled 1,950 million euro, mainly comprising three bond issues amounting to 1,814 million euro, including 500 million euro arising from the March 30, 2007 refi nancing to extend the maturity of Sodexho’s debt and reduce interest costs. This new bond issue was used to repay existing bank loans. The balance of the Group’s debt consists of various bank loans and fi nance leases, and derivative fi nancial instruments.

••

•

•

Cash and cash equivalents net of bank overdrafts totaled 1,377 million euro. Cash investments in instruments with maturities of over three months and restricted cash from the Service Vouchers and Cards activity totaled 454 million euro.

The operating cash position (which includes Service Vouchers and Cards cash investments and restricted cash) was 1,831 million euro, including 966 million euro for Service Vouchers and Cards.

Overall, net debt (borrowings, net of the operating cash position) as of August 31, 2007 was 119 million euro, representing 5% of consolidated equity, as compared to 21% as of August 31, 2006.

As of the balance sheet date, 97% of our borrowings were at fi xed rates, and the average interest rate was 5.6%. Sodexho also had unused credit facilities of 889 million euro.

The recently-announced acquisitions, which are still being fi nalized (VR in Brazil, Tir Groupé in France, and the Circles concierge services business in the United States), will be fi nanced out of available cash and unused credit facilities.

As of August 31, 2007, the Group had off balance sheet commitments of 770 million euro (see note 4.25 to the consolidated fi nancial statements), or 34% of shareholders’ equity attributable to equity holders of the parent.

3. OUTLOOK FOR FISCAL 2008 AND THE MEDIUM TERM

At the Board meeting of November 13, 2007, the Chief Executive Offi cer of Sodexho Alliance, Michel Landel, described the outlook for Fiscal 2008.

He indicated to the Board of Directors that Fiscal 2008 has started well given:

the success of the hospitality contract managed by Sodexho in connection with the Rugby World Cup held in September and October 2007;

recent significant contract wins, such as Nokia in India (Facilities Management), Adventist Bolingbrook Medical, Centennial Hills Hospital and Sanofi - Pasteur in North America, the Facilities Management contract for Societe Generale’s new building in La Defense in Paris, and in the Service Vouchers and Cards activity, a contract signed with the ONEM in Belgium.

Sodexho is confi dent in its ability to manage the effects of the recent strong global price increases of certain food products. This confi dence is based on the search for new supply sources, modifi cation of its menus and

•

•

from improvement in the productivity of its purchasing (for example, reducing the number of suppliers, rationalizing of logistics, etc.).

The change of the corporate name, launch of a new international employee share ownership plan and reinforced deployment of information systems and technology will require additional investment in Fiscal 2008.

Sodexho sets the following objectives for Fiscal 2008:

organic revenue growth above 7%;

operating profit growth of around 12% at constant exchange rates.

“These objectives are in line with the project “Ambition 2015”, aimed at doubling the Group’s revenue. Sodexho employees are fully mobilized to achieve further progress in implementing the six strategic imperatives:

Accelerate profitable organic growth;

Improve operating profits, margins and cash;

••

••



Live Sodexho’s values;

Make Sodexho’s brand the reference in Quality of Life services;

Ensure compliance through reinforced standards, risk management, business rigor and best practices;

Create a competitive advantage through our people and their diversity.

As a corporate citizen, Sodexho contributes to the economic and social development of the countries in which it does business. Sodexho has received recognition for these efforts including being named for the third consecutive year as “ Supersector leader” in its industry sector by the Dow Jones Sustainable Index (DJSI), the sole France-headquartered company to receive this distinction. As a leader in Foodservices, Sodexho places particular importance to offering nutritious and well-balanced menu choices and promoting healthy lifestyles with its customers. Finally, because Sodexho refuses to accept the fact that 850 million people worldwide, including 200 million children, suffer from hunger and malnutrition, Sodexho has extended to

••

•

•

22 of its main host countries the STOP Hunger program, launched 10 years ago, and through which it partners with numerous NGOs and philanthropic organizations.”

Given the strong performance achieved during Fiscal 2007, I remain very confident in Sodexho’s ability to achieve its Ambition 2015 to become the global leader in Quality of Life Services and to achieve annual average revenue growth of 7%.

I take this opportunity to thank our clients for their loyalty, our shareholders for their continued support, and the 342,000 employees of the Group for the progress achieved during Fiscal 2007 by performing to the highest standards in our quality of life services, by “Making every day a better day.”

Michel LandelChief Executive Offi cer


Consolidated Information 4.Sodexho Group Consolidated Financial Statements for the Year Ended August 31, 2007

Consolidated Financial Statements for the Year Ended August 31, 2007

1. CONSOLIDATED INCOME STATEMENT

(in millions of euro) Notes Fiscal 2007 Fiscal 2006 Fiscal 2005

Revenues 2.22. and 3. 13,385 12,798 11,693

Cost of sales 4.1. (11,396) (10,957) (10,033)

Gross profi t 1,989 1,841 1,660

Sales department costs 4.1. (174) (159) (141)

General and administrative costs 4.1. (1,181) (1,104) (1,002)

Other operating income 4.1. 24 42 7

Other operating charges 4.1. (18) (15) (74)

Operating profi t 3. 640 605 450

Financial income 4.2. 78 54 60

Financial expenses 4.2. (178) (162) (172)

Share of profi t of associates 3. and 4.9. 7 8 (6)

Profi t for the period before tax 547 505 332

Income tax expense 4.3. (184) (172) (111)

Result from discontinued operations - - -

Profi t for the period 363 333 221

Profi t attributable to minority interests 16 10 9

PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 347 323 212

Basic earnings per share (in euro) 2.23. and 4.4. 2.22 2.07 1.36

Diluted earnings per share (in euro) 2.23. and 4.4. 2.19 2.05 1.36


4. Consolidated InformationSodexho Group Consolidated Financial Statements for the Year Ended August 31, 2007

2. CONSOLITATED BALANCE SHEET

ASSETS

(in millions of euro) NotesAugust 31,

2007August 31,

2006August 31,

2005

Non-current assets

Property, plant and equipment 2.6., 2.7., 2.8.and 4.5. 440 430 406

Goodwill 2.4., 2.8. and 4.6. 3,515 3,623 3,705

Other intangible assets 2.5., 2.8. and 4.7. 122 126 87

Client investments 2.9. and 4.8. 149 146 138

Associates 2.3.2. and 4.9. 37 36 32

Financial assets 2.12. and 4.11. 88 75 74

Other non-current assets 4.13. 13 18 18

Deferred tax assets 2.20. and 4.21. 136 241 224

Total non-current assets 4,500 4,695 4,684

Current assets

Financial assets 2.12. and 4.11. 11 17 7

Derivative fi nancial instruments 2.12. and 4.17. 0 42 40

Inventories 2.10. and 4.12. 185 168 176

Income tax 48 17 19

Trade and other receivables 4.13. 2,089 1,909 1,750

Restricted cash and fi nancial assets related to the Service Vouchers and Cards activity 2.12. and 4.11. 454 423 326

Cash and cash equivalents 2.13. and 4.14. 1,410 1,042 949

Total current assets 4,197 3,618 3,267

TOTAL ASSETS 8,697 8,313 7,951



LIABILITIES AND EQUITY

(in millions of euro) NotesAugust 31,

2007August 31,

2006*August 31,

2005*

Shareholders’ equity

Common stock 636 636 636

Additional paid in capital 1,186 1,186 1,186

Retained earnings 633 668 708

Consolidated reserves (178) (361) (497)

Equity attributable to equity holders of the parent 2,277 2,129 2,033

Equity attributable to minority interests 23 17 18

Total shareholders’ equity 2.15., 2.19. and 4.15. 2,300 2,146 2,051

Non-current liabilities

Borrowings 2.12., 2.14. and 4.16. 1,839 1,852 1,891

Employee benefi ts 2.17. and 4.18. 232 349 309

Other liabilities 4.20. 79 101 80

Provisions 2.16. and 4.19. 53 68 53

Deferred tax liabilities 2.20. and 4.21. 35 75 80

Total non-current liabilities 2,238 2,445 2,413

Current liabilities

Bank overdrafts 33 36 21

Borrowings 2.12., 2.14. and 4.16. 111 68 85

Derivative fi nancial instruments 2.12. and 4.17. 1 2 2

Income tax 57 80 84

Provisions 2.16. and 4.19. 49 40 97

Trade and other payables 4.20. 2,618 2,369 2,197

Vouchers payable 2.18. 1,290 1,127 1,001

Total current liabilities 4,159 3,722 3,487

TOTAL LIABILITIES AND EQUITY 8,697 8,313 7,951

* Including the effect of the deferred tax liabilities described in note 4.15.



3. CONSOLIDATED CASH FLOW STATEMENT

For a detailed analysis of the consolidated cash fl ow statement, refer to note 4.22.

(in millions of euro) Fiscal 2007 Fiscal 2006 Fiscal 2005

Operating activities

Operating profi t 640 605 450

Elimination of non-cash and non-operating items

Depreciation and amortization 186 164 168

Provisions (1) (34) 62

Losses/(gains) on disposal and other 3 (21) 5

Dividends received from associates 4 1 0

Change in working capital from operating activities 188 40 231

Change in inventories (21) 2 (14)

Change in accounts receivable (210) (189) (59)

Change in trade and other payables 284 203 162

Change in vouchers payable 161 131 123

Change in fi nancial assets related to the Service Vouchers and Cards activity (26) (107) 19

Interest paid (113) (114) (122)

Interest received 30 18 19

Income tax paid (184) (171) (136)

Net cash provided by operating activities 753 488 677

Investing activities

Acquisitions of property, plant & equipment and intangible assets 3. (229) (192) (143)

Disposals of property, plant & equipment and intangible assets 32 17 16

Change in client investments 4.8. and 3. (11) (15) (19)

Change in fi nancial assets 2 (15) 5

Effect of acquisitions of subsidiaries (18) (30) (3)

Effect of dispositions of subsidiaries 3 25 (3)

Net cash used in investing activities (221) (210) (147)

Financing activities

Dividends paid to parent company shareholders 4.15. (149) (117) (109)

Dividends paid to minority shareholders of consolidated companies 4.15. (10) (10) (8)

Change in shareholders’ equity (61) (4) (13)

Proceeds from borrowings 4.22. 524 23 464

Repayment of borrowings 4.22. (448) (71) (718)

Net cash used in fi nancing activities (144) (179) (384)

CHANGE IN NET CASH AND CASH EQUIVALENTS 388 99 146

Net effect of exchange rates and other effects on cash (17) (21) 23

Net cash and cash equivalents at beginning of period 1,006 928 759

NET CASH AND CASH EQUIVALENTS AT END OF PERIOD 4.14. 1,377 1,006 928



4. STATEMENT OF RECOGNIZED INCOME AND EXPENSE


Financial instruments 5 (6) 8

Change in cumulative translation adjustment (110) (92) 10

Actuarial gains / (losses) on employee benefi ts 74 (30) 7

Profi t / (loss) recognized directly in equity (31) (128) 25

Profi t for the period 363 333 221

Total recognized profi t / (loss) for the period 332 205 246

Attributable to:

Equity holders of the parent 317 196 237

Minority interests 15 9 9


4. Consolidated InformationNotes to the Consolidated Financial Statements

1. SIGNIFICANT EVENTS 117

2. ACCOUNTING POLICIES 1172.1 Basis of preparation of the fi nancial

statements 1172.2 Use of estimates 1182.3 Principles and methods of consolidation 1182.4 Business combinations 1192.5 Intangible assets 1192.6 Property, plant and equipment 1202.7 Leases 1202.8 Impairment of assets 1202.9 Client investments 1212.10 Inventories 1212.11 Trade and other receivables 1212.12 Financial instruments 1212.13 Cash and cash equivalents 1232.14 Borrowing costs 1232.15 Sodexho Alliance treasury shares 1232.16 Provisions 1232.17 Employee benefi ts 1232.18 Vouchers payable 1242.19 Share-based payment 1242.20 Deferred taxes 1242.21 Trade and other payables 1242.22 Income statement 1242.23 Earnings per share 1252.24 Cash fl ow statement 125

3. SEGMENT INFORMATION 1263.1 By business segment 1263.2 By geographic segment 130

4. INFORMATION ON THE FINANCIAL STATEMENTS AS OF AUGUST 31, 2007 131

4.1 Operating expenses by nature 1314.2 Financial income and expense 1314.3 Income tax expense 1324.4 Earnings per share 1334.5 Property, plant and equipment 1344.6 Goodwill 1364.7 Intangible assets 1374.8 Client investments 1384.9 Investments in associates 1384.10 Impairment of assets 1404.11 Financial assets 1414.12 Inventories 1434.13 Trade and other receivables 1434.14 Cash and cash equivalents 1434.15 Statement of changes in shareholders’

equity 1444.16 Borrowings 1464.17 Financial instruments 1484.18 Long-term employee benefi ts 1504.19 Provisions 1544.20 Trade and other payables 1554.21 Deferred taxes 1554.22 Cash fl ow statement 1564.23 Share-based payment 1584.24 Business combinations 1614.25 Commitments and contingencies 1624.26 Related parties 1634.27 Group employees 1654.28 Litigation 1654.29 Events subsequent to the balance sheet 165

5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY 166

5.1 Exposure to foreign exchange and interest rate risk 166

5.2 Exposure to liquidity risk 167

6. SCOPE OF CONSOLIDATION 168

Notes to the Consolidated Financial Statements


Consolidated Information 4.Notes to the Consolidated Financial Statements

Sodexho Alliance is a société anonyme (a form of limited liability company) domiciled in France, with its headquarters located in Montigny-Le-Bretonneux.

The consolidated fi nancial statements of the Group were approved by the Board of Directors on November 13, 2007.

1. SIGNIFICANT EVENTS

2. ACCOUNTING POLICIES

On July 16, 2007, Sodexho completed its delisting from the New York Stock Exchange (NYSE) and terminated the registration of its shares under the U.S. Securities Exchange Act of 1934.

Sodexho is therefore no longer under any requirement to fi le an Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC).

In order to extend the maturity of its existing debt and benefi t from favorable trends in market rates, Sodexho Alliance partially refi nanced its debt by issuing 500 million euro in bonds carrying out, on March 30, 2007, with a 7-year maturity and an annual interest rate of 4.5%.

2.1 Basis of preparation of the fi nancial statements

2.1.1 Basis of preparation of financial information for fiscal 2007

In application of European Regulation 1606/2002 of July 19, 2002, the consolidated fi nancial statements of the Sodexho Group have been prepared in accordance with international fi nancial reporting standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved by the European Accounting Regulatory Committee as of the balance sheet date. Information for the comparative periods presented (fi scal 2005 and fi scal 2006) has been prepared using the same principles.

Given the Group’s fi scal year end, the application dates for IFRS as approved by the European Union as compared to the application dates required by the IASB were identical for Sodexho Alliance for the last three years. As a result, the application of IFRS as approved by the IASB does not result in any change in the preparation and presentation of the consolidated fi nancial statements.

In connection with the initial adoption of IFRS, effective September 1, 2004, the Group elected the following treatments as permitted under IFRS 1:

to not use the option available under IFRS 1 of remeasuring property, plant and equipment and intangible assets at fair value in the opening balance sheet as of September 1, 2004;

to not restate retrospectively business combinations effected prior to September 1, 2004;

to reclassify the currency translation reserve as of September 1, 2004 to consolidated reserves;

to restrict application of IFRS 2 to stock option plans granted after November 7, 2002 and not fully vested as of January 1, 2005;

•

•

•

•

to recognize in equity all accumulated actuarial gains and losses arising on retirement and other long-term employee benefi ts as of September 1, 2004.

The Group also elected for early recognition, effective September 1, 2004, of the impact of IAS 39 and IAS 32 on fi nancial instruments.

In addition, the Group elected to adopt (from fi scal 2005) prior to its application date (fi scal 2007), the amendment to IAS 19, which allows for the recognition of actuarial gains and losses arising in each period directly in equity.

Finally, the Group assessed the impact of IFRIC4 (applicable to the Group in Fiscal 2007) but did not make any adjustment because of the immateriality of the amounts involved.

2.1.2 New standards and interpretations applicable in the period

The amendments to IAS 39 and the interpretations listed below were mandatorily applicable for the Group effective September 1, 2006, and were not early adopted in prior periods. The application of these amendments and interpretations had no impact on the consolidated fi nancial statements of the Sodexho Group as of August 31, 2007:

Amendments to IAS 39:

“Fair Value Option”,

“Cash Flow Hedges of Forecast Intragroup Transactions”,

“Financial Guarantee Contracts”;

IFRIC 8 – “Scope of IFRS 2”;

IFRIC 9 – “Reassessment of Embedded Derivatives”.

•

••

•

•

••



2.1.3 Standards and interpretations issued but not yet applicable

Sodexho has decided not to early adopt the following standards, amendments to standards and interpretations, which had been approved by the European Union as of August 31, 2007 and are applicable to accounting periods beginning on or after January 1, 2007:

IFRS 7 – “Financial Instruments: Disclosures”;

Amendment to IAS 1 – “Capital Disclosures”.

The Group is currently assessing the practical implications of these pronouncements and the effect of their application on the consolidated fi nancial statements.

Application of IFRIC 10, “Interim Financial Reporting” and IFRIC 11, “Group and Treasury Share Transactions”, both of which apply with effect from fi scal 2008, is not expected to have a material impact.

The Group is also assessing the impact on the consolidated financial statements of the following standards, interpretations and amendments, which have been issued by the IASB but not yet approved by the European Union:

IFRS 8 – “Operating Segments”, applicable to the Group from fi scal 2010;

IFRIC 12 – “Service Concession Arrangements”, applicable from fi scal 2009;

IFRIC 13 – “Customer Loyalty Programmes”, applicable from fi scal 2009;

IFRIC 14 – “IAS 19 (Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction)”, applicable from fi scal 2009;

Amendment to IAS 23 – “Borrowing Costs”, applicable from fi scal 2010.

2.2 Use of estimatesThe preparation of fi nancial statements in accordance with IFRS requires the management of Sodexho and its subsidiaries to make estimates and assumptions which affect the amounts reported for assets, liabilities and contingent liabilities as of the date of preparation of the fi nancial statements, and for revenues and expenses for the period.

These estimates and assumptions are reassessed continuously based on past experience and on various other factors considered reasonable in view of current circumstances, which constitute the basis for assessments of the carrying amount of assets and liabilities.

Actual results may differ substantially from these estimates if assumptions or circumstances change.

Significant items subject to such estimates and assumptions include:

provisions for litigation (notes 4.19. and 4.28.);

post-employment benefi t plan assets and liabilities (note 4.18.);

••

•

•

•

•

•

••

impairment of current and non-current assets (note 4.13.);

deferred taxes (note 4.21.);

goodwill (cf. note 4.24.);

share-based payment (note 4.23.).

2.3 Principles and methods of consolidation

2.3.1 Intragroup transactionsIntragroup transactions and balances, and unrealized losses and gains between Group companies, are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, unless they represent an impairment loss.

2.3.2 Consolidation methodsA subsidiary is an entity directly or indirectly controlled by Sodexho Alliance. Control exists when the Group has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing whether control exists, potential voting rights that are currently exercisable or convertible are considered. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from the date on which control is obtained to the date on which control ceases to be exercised.

Companies in which Sodexho Alliance directly or indirectly exercises signifi cant infl uence over fi nancial and operating policy without exercising control are consolidated by the equity method from the date on which signifi cant infl uence is exercised to the date on which it ceases to be exercised. Signifi cant infl uence is deemed to exist where the Group holds between 20% and 50% of the voting rights.

Sodexho owns a number of equity interests in project companies established in connection with Public-Private Partnership (PPP) contracts. These contracts enable governments to call upon the private sector for the design, construction, fi nancing and management of public infrastructure (hospitals, schools, barracks, prisons), with detailed performance criteria.

Sodexho only makes equity and subordinated debt investments in such projects when it acts as a service provider to the project company. Further information on the investments as of August 31, 2007 is provided in note 4.9.

Each project company is assessed to determine whether Sodexho Alliance exercises control or signifi cant infl uence based on the criteria of IAS 27, IAS 28 and SIC 12.

•

•••



2.3.3 Foreign currency translationThe exchange rates used are derived from rates quoted on the Paris Bourse and other major international fi nancial markets.

Foreign currency transactionsMonetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated using the closing rate. The resulting translation differences are reported in fi nancial income or expense.

Non-monetary foreign-currency assets and liabilities reported at historical cost are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities reported at fair value are translated using the exchange rate at the date when the fair value was determined.

Transactions for the period are translated at the exchange rate at the transaction date.

Translation differences on monetary items that are in substance part of a net investment in a foreign operation consolidated by Sodexho are reported in consolidated shareholders’ equity until the disposal or liquidation of the investment.

Financial statements denominated in foreign currencies

Countries with stable currenciesThe separate fi nancial statements of each consolidated entity are presented on the basis of the primary economic environment (functional currency) in which the entity operates.

For consolidation purposes, all foreign-currency assets and liabilities of consolidated entities are translated into the reporting currency of the Sodexho Group (the euro) at the closing exchange rate, and all income statement items are translated at the average exchange rate for the period. The resulting translation differences are recognized in shareholders’ equity under “Cumulated translation adjustments”.

Statutory monetary adjustments are maintained in the fi nancial statements of subsidiaries in countries that were previously hyperinfl ationary (Argentina, Chile, Colombia, Mexico, Turkey and Venezuela). The residual translation differences between the monetary adjustment and the use of closing exchange rates are reported in shareholders’ equity.

Countries with hyperinflationary economiesFor these countries, the difference between profi t or loss for the period translated at the average rate and profi t or loss for the period translated at the closing rate is reported in fi nancial income or expense.

As of August 31, 2007, no country in which Sodexho is operating met the criteria for having a hyperinfl ationary economy.

2.3.4 Transactions with minority interestsSodexho has a policy of conducting transactions with minority interests in the same way as transactions with third parties. Any gain or loss arising on disposals to minority interests is recognized in the income statement. Goodwill is recognized on acquisitions of shares from minority interests

2.4 Business combinationsThe purchase method is used to account for acquisitions of subsidiaries by the Group. The cost of acquisition corresponds to the fair value of assets acquired, equity instruments issued and liabilities incurred or assumed as of the date of the acquisition, plus costs directly attributable to the acquisition.

On fi rst-time consolidation of a subsidiary or equity interest, the Group measures all identifi able items acquired in the currency of the acquired entity.

In accordance with IFRS 3, changes to the measurement of identifi able assets and liabilities may be made, as a result of specialist valuations or additional analysis, within 12 months of the date of acquisition. Once this 12-month period has elapsed, the effect of any adjustments is recognized directly in the income statement unless it involves the correction of an error.

If future benefi ts of reported tax losses or other deferred tax assets of an acquired company were not recognized at the time of an acquisition because they did not meet the required accounting criteria but subsequently meet the accounting criteria when realized, the carrying amount of goodwill is reduced by the amount that would have been recorded if the tax asset had been recognized at the time of the acquisition.

Goodwill arising on the acquisition of associates is included in the value of the investment in the associate.

2.4.1 GoodwillAny excess of the cost of an acquisition over the Group’s interest in the fair value of the identifi able assets, liabilities and contingent liabilities of the acquired entity at the acquisition date is recognized as goodwill in the balance sheet.

Goodwill is not amortized, but is subject to impairment tests immediately if there is evidence of impairment, and at least once per year. Impairment test procedures are described in note 2.8. Any impairment losses recognized in the income statement are irreversible.



2.4.2 Negative goodwillAny excess of the Group’s interest in the fair value of the identifi able assets, liabilities and contingent liabilities of the acquired entity at the acquisition date over the cost of the acquisition is treated as negative goodwill, and is recognized in the income statement immediately in the period of acquisition.

2.5 Intangible assetsSeparately acquired intangible assets are initially measured at cost in accordance with IAS 38. Intangible assets acquired in a business combination that (i) can be reliably measured, (ii) are controlled by the Group and (iii) are separable or arise from a legal or contractual right are recognized at fair value separately from goodwill. Subsequent to initial recognition, intangible assets are measured at cost less accumulated amortization and impairment losses.

Intangible assets other than brands are regarded as assets with fi nite useful lives, and are amortized by the straight line method over their expected useful lives:

Integrated management software 5 years

Other software 3-4 years

Patents and licenses 2-10 years

Other intangible assets 3-5 years

Client relationships 3-20 years

The cost of licenses and software recognized in the balance sheet comprises the costs incurred in acquiring the software and bringing it into use, and is amortized over the estimated useful life of the asset.

Subsequent expenditures on intangible assets are capitalized only if they increase the expected future economic benefi ts associated with the asset to which they relate. Other expenditures are expensed as incurred.

2.6 Property, plant and equipment

In accordance with IAS 16, items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, except for land which is measured at cost less accumulated impairment losses. Cost includes expenditures directly incurred to acquire the asset, and in some cases may also include estimated unavoidable future dismantling, removal and site remediation costs.

Subsequent expenditures are included in the carrying amount of the asset, or recognized as a separate

component, if it is probable that the future economic benefi ts of the expenditures will fl ow to Sodexho and the cost can be measured reliably. All other repair and maintenance costs are recognized as expenses during the period in which they are incurred, except costs incurred to improve productivity or extend the useful life of an asset, which are capitalized.

Items of property, plant and equipment are depreciated over their expected useful lives using the component-based approach, taking account of their residual value. The straight line method of depreciation is regarded as the method that most closely refl ects the expected pattern of consumption of the future economic benefi ts embodied in items of property, plant and equipment.

The useful lives generally used by the Group are:

Buildings 20-30 years

General fi xtures and fi ttings 3-10 years

Plant and machinery 3-8 years

Motor vehicles 4 years

Boats and pontoons (depending on the component) 5-15 years

The residual values and useful lives of items of property, plant and equipment are reviewed and, if necessary, adjusted at each balance sheet date.

The carrying amounts of items of property, plant and equipment are tested for impairment if there is an indication that an item has become impaired.

2.7 LeasesLeases contracted by Sodexho as lessee are accounted for in accordance with IAS 17, “Leases”.

Finance leases, under which substantially all the risks and rewards incidental to ownership of an asset are transferred to Sodexho, are accounted for as follows:

at the commencement of the lease term, the leased asset is recognized as an asset at the lower of fair value or the present value of the minimum lease payments;

the corresponding liability is recognized under “Borrowings”;

lease payments are apportioned between the fi nance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the remaining balance of the liability.

An asset held under a fi nance lease is depreciated over its estimated useful life, or if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, over the shorter of the lease term and its useful life.

•

•

•



Leases under which the lessor retains substantially all the risks and rewards incidental to ownership of the asset are treated as operating leases. Payments made under operating leases are expensed as an operating item on a straight line basis over the term of the lease.

2.8 Impairment of assets

2.8.1 Impairment of assets with finite useful lives

Property, plant and equipment and intangible assets with fi nite useful lives are tested for impairment if there is objective indication of impairment. Impairment losses are recognized in the income statement, and may be reversed subsequently.

2.8.2 Impairment of assets with indefinite useful lives

Goodwill has an indefinite useful life. It is tested for impairment whenever there is an indication that it may have become impaired, and at least annually, in the last quarter of the fi scal year. The results of the impairment tests conducted are reassessed using data as of August 31.

Cash Generating UnitsAssets that do not generate cash infl ows that are largely independent of those from other assets, and hence cannot be tested for impairment individually, are grouped together in Cash Generating Units (CGUs).

Impairment tests are conducted for each CGU, which is generally the country level of an activity. The assets allocated to each CGU comprise goodwill, non-current assets, and net working capital.

Indications of impairmentThe main indicators that a CGU may be impaired are a signifi cant decrease in revenues and gross margin or material changes in market trends.

Methods used to determine the recoverable amountAn impairment loss is recognized in the income statement when the carrying amount of an asset or CGU is greater than its recoverable amount.

Recoverable amount is the greater of:

fair value less costs to sell, i.e. the amount obtainable from the sale of an asset or CGU in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal;

•

value in use, i.e. the present value of the future cash fl ows expected to be derived from continuing use and ultimate disposal of the asset or CGU.

The value in use of CGUs is estimated using after-tax cash fl ow projections generally based on three year business plans prepared by management and extrapolated into future years.

Management both at Group and subsidiary levels prepare gross profi t forecasts on the basis of past performance and expected market trends. The growth rate used beyond the initial period of the business plan refl ects the growth rate for the business sector and region involved.

Expected future cash fl ows are discounted at the average cost of capital.

The growth and discounting rates used for impairment tests during the period are provided in note 4.10.

Recognition of impairment lossesAn impairment loss recognized with respect to a CGU is allocated initially to reducing the carrying amount of any goodwill allocated to that CGU, and then to reducing the carrying amount of the other assets of the CGU in proportion to the carrying amount of each asset.

2.8.3 Reversal of impairment lossesImpairment losses recognized with respect to goodwill cannot be reversed.

Impairment losses recognized with respect to any other asset may be reversed if there is a change in the estimates used to determine its recoverable amount.

The increased carrying amount of an asset resulting from the reversal of an impairment loss cannot exceed the carrying amount that would have been determined for that asset had no impairment loss been recognized.

2.9 Client investmentsIn some contracts, Sodexho makes a fi nancial contribution to the purchase of equipment or fi xtures on the client site that are necessary to fulfi ll service obligations. These assets are amortized over the period of the service obligation.

In the cash fl ow statement, changes in the value of these investments are a component of investing cash fl ows.

•



2.10 InventoriesInventories are measured at the lower of cost or net realizable value. Cost is determined by the FIFO (First In First Out) method.

2.11 Trade and other receivablesTrade and other receivables are initially recognized at fair value, and are subsequently measured at amortized cost less impairment losses recognized in the income statement.

Where the full amount due under the initial terms of the contract is not recoverable, bad debt provision is recognized.

2.12 Financial instrumentsFinancial assets and liabilities are recognized and measured in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”.

Financial assets and liabilities are recognized in the balance sheet when Sodexho becomes a party to the contractual provisions of the instrument.

The fair values of fi nancial assets and derivative instruments are determined on the basis of quoted market prices or of valuations carried out by the depositary bank.

2.12.1 Financial assetsUnder IAS 39, financial assets are measured and recognized in three main categories:

available-for-sale financial assets include equity investments in non-consolidated entities, marketable securities with maturities greater than three months, and restricted cash. They are measured at fair value, with changes in fair value recognized directly in equity on a separate line. When an available-for-sale fi nancial asset is sold or impaired, the cumulative fair value adjustment previously recognized in equity is transferred to the income statement. If the fair value of an available-for-sale fi nancial asset cannot be reliably measured, it is recognized at cost;

loans and receivables include fi nancial and security deposits, and loans to non-consolidated equity investees. These fi nancial assets are shown in the balance sheet at amortized cost, which is equivalent to acquisition cost as no signifi cant transaction costs are incurred in acquiring such assets. They are tested for impairment if there is an indication that they may be impaired, and an impairment loss is recognized if the carrying amount of the asset is greater than its estimated recoverable amount;

financial assets at fair value through profit or loss include other fi nancial assets held for trading and acquired for the purpose of resale in the near term. Subsequent changes in the fair value of these assets

•

•

•

are recognized in fi nancial income or expense in the income statement. An impairment loss is recognized if the recoverable amount of a fi nancial asset at fair value through profi t or loss is less than its carrying amount. Such impairment losses may be reversed if the increase in the recoverable amount can be related objectively to an event occurring after the impairment was recognized.

2.12.2 Derivative instrumentsSodexho’s policy is to fi nance acquisitions in the currency of the acquired entity, generally at fi xed rates of interest.

The majority of the Group’s variable-rate borrowings are converted to fi xed-rate using interest rate swaps. In most cases where borrowings are made in a currency other than that of the acquired entity, currency swaps are contracted.

As required by IAS 39, these derivative fi nancial instruments are initially recognized in the balance sheet at fair value, as current fi nancial assets or liabilities.

Subsequent changes in the fair value of derivative instruments are recognized in the income statement, except in the case of instruments that qualify as cash fl ow hedges.

In the case of cash flow hedges, the necessary documentation is prepared at inception and updated at each balance sheet date. Gains or losses arising on the effective portion of the hedge are recognized in equity, and are not recognized in the income statement until the underlying asset or liability is realized.

Gains or losses arising on the ineffective portion of the hedge are recognized immediately in the income statement.

Sodexho relies on external specialists to determine the fair value of these derivative instruments.

2.12.3 Commitments to buy out minority interests

As required by IAS 32, Sodexho recognizes commitments to buy out minority interests as a liability within borrowings in the consolidated balance sheet. In the absence of any IASB standard or interpretation regarding the treatment of the matching debit entry, Sodexho has elected to offset the amount involved against the relevant minority interests in shareholders’ equity until they are eliminated in full, and to treat any surplus as goodwill.

Firm commitments to buy out minority interests are therefore accounted for as follows under IFRS:

the liability arising from the commitment is recognized at the present value of the buyout commitment;

the expected goodwill is recognized in the balance sheet;

the minority interest in profi t for the period is reclassifi ed as attributable to the equity holders of the parent;

•

•

•



the change in value arising from the unwinding of the discounting of the liability is recognized in the income statement as a fi nancial expense.

Subsequent price adjustments are recognized as adjustments to the amount of goodwill.

This accounting policy may be revised in connection with the conclusions of the IASB.

2.12.4 Bank borrowings and bond issuesAll borrowings, including utilized bank credit facilities and overdrafts, are initially recognized at the fair value of the amount received less directly attributable transaction costs. Subsequent to initial recognition, borrowings are measured at amortized cost using the effective interest method.

The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of a fi nancial liability to the net carrying amount of that liability. The calculation includes the effects of transaction costs, and of differences between the issue proceeds (net of transaction costs) and the value at redemption.

2.13 Cash and cash equivalentsCash and cash equivalents comprise cash on hand and short-term cash investments in money-market instruments which either have an initial maturity of less than three months or may be withdrawn at any time with no signifi cant risk of loss in value.

2.14 Borrowing costsBorrowing costs are treated as follows:

borrowing costs directly attributable to the acquisition, construction or production of a non-current asset are capitalized as part of the cost of the underlying asset, as permitted by IAS 23;

borrowing costs not directly attributable to a non-current asset are netted off the related borrowing in the balance sheet and recognized in the income statement over the term of the borrowing, in accordance with IAS 39.

2.15 Sodexho Alliance treasury shares

Sodexho Alliance shares held by the company itself and/or by other Group companies are shown as a reduction in consolidated shareholders’ equity at acquisition cost.

Gains and losses on acquisitions and disposals of treasury shares are recognized directly in consolidated shareholders’ equity and do not affect profi t or loss for the period.

•

•

•

2.16 ProvisionsA provision is recorded if (i) an entity has a legal or constructive obligation at the balance sheet date, (ii) it is probable that settlement of the obligation will require an outfl ow of resources, and (iii) the amount of the liability can be reliably measured.

Provisions primarily cover commercial, employee-related and tax-related risks and litigation arising in the course of operating activities, and are measured in accordance with IAS 37 using assumptions that take account of the most likely outcomes.

Where the effect of the time value of money is material, the amount of the provision is determined by discounting the expected future cash fl ows at a pre-tax discount rate that refl ects current market assessments of the time value of money and any risks specifi c to the liability.

Loss-making contractsA provision for onerous contracts is established where the unavoidable costs of meeting the obligations under a contract exceed the economic benefi ts expected to be received under it.

2.17 Employee benefi ts

2.17.1 Short-term benefitsGroup employees receive short-term benefi ts such as vacation pay, sick pay, bonuses and other benefi ts (other than termination benefi ts), payable within 12 months of the related service period.

These benefi ts are reported as current liabilities.

2.17.2 Post-employment benefitsSodexho measures and recognizes post-employment benefi ts in accordance with IAS 19:

contributions to defined-contribution plans are recognized as an expense;

defi ned-benefi t plans are measured using actuarial valuations.

Sodexho uses the projected unit credit method as the actuarial method for measuring its post-employment benefi t obligations, on the basis of the national or company-wide collective agreements effective within each entity.

Factors used in calculating the obligation include length of service, life expectancy, salary infl ation, staff turnover, and macro-economic assumptions specifi c to countries in which Sodexho operates (such as infl ation rate, rate of return on plan assets and discount rate).

Sodexho elected to early adopt the amended IAS 19, effective August 31, 2005. Actuarial gains and losses arising at each balance sheet date are therefore recognized in equity, net of deferred taxes, without being amortized through the income statement.

•

•



If benefi ts under an existing plan are amended or a new plan is established, past service cost relating to vested benefi ts is recognized in the income statement, and past service cost relating to benefi ts not yet vested is recognized on a straight line basis over the average residual vesting period.

The accounting treatment applied to defi ned-benefi t plans is as follows:

the obligation, net of plan assets, is recognized as a non-current liability in the balance sheet if the obligation exceeds the plan assets and the unrecognized past service cost.

If the value of plan assets exceeds the obligation under the plan, the net amount is recognized as a non-current asset. Overfunded plans are recognized as assets only if they represent future economic benefi ts that will be available to Sodexho. Where the calculation of the net obligation results in an asset for Sodexho, the amount recognized for this asset may not exceed the total of the unrecognized past service cost plus the present value of all future refunds and reductions in future contributions under the plan;

the expense recognized in the income statement comprises:

current service cost, amortization of past service cost, and the effect of any plan curtailments or settlements, all of which are recorded as operating items,

the effect of discounting and the expected return on plan assets, which are recorded in fi nancial income or expense.

Sodexho contributes to multi-employer plans, primarily in Sweden and the United States. These plans are accounted for as defined-contribution plans, as the information provided by the plan administrators is insuffi cient for them to be accounted for as defi ned-benefi t plans.

2.17.3 Other long-term employee benefitsOther long-term employee benefits are measured in accordance with IAS 19. The expected cost of such benefi ts is recognized as a non-current liability over the employee’s period of service. Actuarial gains and losses are recognized immediately in the income statement.

2.18 Vouchers payableVouchers payable are recognized as a current liability at fair value, which is the face value of vouchers in circulation or returned to Sodexho but not yet reimbursed to affi liates.

•

•

•

•

2.19 Share-based paymentSome Group employees receive compensation in the form of share-based payment.

In accordance with the transitional provisions of IFRS 1, only plans with a grant date after November 7, 2002 and not vested as of January 1, 2005 are measured and recognized as employee costs.

The services compensated by these plans are recognized as an expense, with the matching credit entry recognized in shareholders’ equity, over the vesting period. The amount of expense recognized in each period is determined by reference to the fair value of the options granted as of the grant date, computed using the binomial model.

At each balance sheet date, Sodexho reassesses the number of potentially exercisable options. The impact of any change in estimates is recognized in the income statement, with the matching entry recognized in shareholders’ equity.

2.20 Deferred taxesDeferred taxes are recognized on differences between the carrying amount of an asset or liability and its tax base, using the tax rate that is expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that are enacted or substantively enacted at the balance sheet date.

Deferred taxes are not recognized on the following items:

goodwill that is not deductible for tax purposes;

initial recognition of an asset in a transaction that is not a business combination and that affects neither accounting profi t nor taxable profi t; and

temporary differences on investments in subsidiaries that are not expected to reverse in the foreseeable future.

Taxes on items recognized directly in shareholders’ equity are recognized in shareholders’ equity and not in the income statement.

Residual deferred tax assets on tax loss carry-forwards (after offset of deferred tax liabilities) are only recognized if their recovery is considered probable.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current tax assets and liabilities and the deferred taxes relate to the same taxable entity and tax authority.

••

•



2.21 Trade and other payablesTrade and other payables are measured at fair value on initial recognition, and subsequently at amortized cost.

2.22 Income statement

2.22.1 Income statement by functionAs permitted by IAS 1, “Presentation of Financial Statements”, Sodexho presents its income statement by function.

Operating profi t comprises the following components:

gross profi t;

sales department costs;

general and administrative costs;

other operating income and charges.

2.22.2 RevenuesIn accordance with IAS 18, revenues reported by Sodexho relate to the sale of services in connection with the ordinary activities of fully-consolidated companies as follows:

Food and Facilities Management services: revenues include all revenues stipulated in the contract, in consideration of whether Sodexho acts as principal (the vast majority of cases) or agent;

Service Vouchers and Cards: revenues comprise commissions received from clients and affiliates, fi nancial income from the investment of surplus cash generated by the activity, and profi ts from vouchers and cards not reimbursed.

In accordance with IAS 18, revenues are measured at the fair value of the consideration received or receivable, net of discounts and rebates and of value added tax (VAT) and other taxes. Revenues are recognized when it is probable that future economic benefi ts will fl ow to Sodexho and these benefi ts can be measured reliably. No revenue is recognized if there is signifi cant uncertainty about recoverability of the costs incurred or to be incurred in meeting the service obligation.

Foodservices revenues are recognized when the service is rendered.

••••

•

•

2.23 Earnings per shareIn accordance with IAS 33, earnings per share is calculated by dividing profi t for the period by the weighted average number of ordinary shares outstanding during the period, net of treasury shares.

In the calculation of diluted earnings per share, the denominator is increased by the number of potentially dilutive shares, and the numerator is adjusted for all dividends and interest recognized in the period and any other change in income or expenses that would result from conversion of the potentially dilutive shares.

2.24 Cash fl ow statementSodexho presents its cash fl ow statement accordance with IAS 7.

The cash fl ow statement analyzes changes in net cash and cash equivalents, defi ned as cash and cash equivalents less current bank overdrafts and credit bank balances payable on demand as part of Sodexho’s treasury management strategy.



3. SEGMENT INFORMATION

As of August 31, 2007, Sodexho had two principal activities worldwide: Food and Facilities Management Services, and Service Vouchers and Cards. Food and Facilities Management Services is further segmented by geographic region:

North America;

Continental Europe;

United Kingdom and Ireland;

Rest of the World.

••••

Food and Facilities Management Services activities (split by geographic region), the Service Vouchers and Cards activity, and Holding Companies, constitute the Group’s primary segments.

The majority of Sodexho’s other activities are included in Food and Facilities Management Services. These mainly comprise kitchen installation services, some event-driven activities, and the “Remote Sites Management” activity (included in the Rest of the World segment of the Food and Facilities Management Services activity). None of these activities individually represents a reportable segment.

3.1 By operating activity

3.1.1 Income statement information

Fiscal 2007

Food and Facilities Management Services (FFMS)

Service Vouchers

and Cards

Holding Compa-

niesElimi-nation Total

North America

Conti-nental

Europe

United Kingdom

and Ireland

Rest of the world Total (FFMS)

Revenues (third-party) 5,492 4,388 1,475 1,591 12,946 439 0 0 13,385

Inter-segment sales (Group) 0 0 0 0 0 8 0 (8) 0

Segment revenues 5,492 4,388 1,475 1,591 12,946 447 0 (8) 13,385

Segment operating profi t 253 214 72 41 580 135 (67) (8) 640

Share of profi t of associates 1 0 2 4 7 0 0 0 7

Net fi nancing costs (100)

Income tax expense (184)

Minority interests 16

Profi t attributable to equity holders of the parent 347

Depreciation / amortization of segment assets 47 68 37 18 170 10 6 0 186

Other non-cash items 6 2 0 1 9 1 3 0 13

Impairment losses recognized 0 2 0 0 2 0 0 0 2

Impairment losses reversed 0 0 0 4 4 0 0 0 4



Fiscal 2006


Service Vouchers

and Cards

Holding Compa-


North America

Conti-nental

Europe

United Kingdom

and Ireland






Share of profi t of associates 1 0 5 2 8 0 0 0 8











Fiscal 2005


Service Vouchers

and Cards

Holding Compa-


North America

Conti-nental

Europe

United Kingdom

and Ireland






Share of profi t of associates 1 0 (8) 1 (6) 0 0 0 (6)









3.1.2 Balance sheet information

As of August 31, 2007


Service Vouchers

and Cards

Holding Compa-


North America

Conti-nental

Europe

United Kingdom

and Ireland


Segment assets 3,006 1,956 1,213 622 6,797 1,027 329 (230) 7,923

Associates 8 0 9 20 37 0 0 0 37

Financial assets (including derivatives) 553

Income tax assets 184

Total Assets 8,697

Segment liabilities 937 1,174 451 424 2,986 1,413 185 (230) 4,354

Financial liabilities 1,951

Income tax liabilities 92

Shareholders’ equity 2,300

Total liabilities and equity 8,697

Capital expenditure during the period 62 93 46 21 222 16 3 (1) 240





Service Vouchers

and Cards

Holding Compa-


North America

Conti-nental

Europe

United Kingdom

and Ireland


Segment assets 3,142 1,885 1,116 560 6,703 852 104 (197) 7,462

Associates 8 0 5 23 36 0 0 0 36



Total Assets 8,313



Income tax liabilities* 155

Shareholders’ equity* 2,146


Capital expenditure during the period 68 67 38 21 194 13 1 (1) 207




Service Vouchers

and Cards

Holding Compa-


North America

Conti-nental

Europe

United Kingdom

and Ireland


Segment assets 3,166 1,820 1,003 495 6,484 801 110 (166) 7,229

Associates 8 0 1 23 32 0 0 0 32



Total Assets 7,951



Income tax liabilities* 164

Shareholders’ equity* 2,051


Capital expenditure during the period 59 59 16 16 150 8 4 0 162




3.2 By geographic segmentSegment information is reported for each of the principal geographic regions in which Sodexho operates, and includes all activities within that geographic region.

Fiscal 2007North

AmericaContinental

Europe

United Kingdom and

IrelandRest of the

worldHolding

companies Elimination Total

Revenues (third-party) 5,492 4,601 1,484 1,816 0 (8) 13,385

Segment assets 3,006 2,393 1,251 1,174 329 (230) 7,923

Capital expenditure during the period 62 100 47 29 3 (1) 240

Fiscal 2006North

AmericaContinental

Europe

United Kingdom and

IrelandRest of the

worldHolding



Segment assets 3,142 2,274 1,141 998 104 (197) 7,462

Capital expenditure during the period 68 73 39 27 1 (1) 207

Fiscal 2005North

AmericaContinental

Europe

United Kingdom and

IrelandRest of the

worldHolding



Segment assets 3,166 2,213 1,032 874 110 (166) 7,229

Capital expenditure during the period 59 63 16 20 4 0 162



4. INFORMATION ON THE FINANCIAL STATEMENTS AS OF AUGUST 31, 2007

4.1 Operating expenses by nature


Depreciation, amortization and impairment losses (176) (188) (171)

Employee costs

- Wages and salaries (4,854) (4,656) (4,207)

- Other employee costs(1) (1,453) (1,385) (1,330)

Purchases of consumables and change in inventory (4,334) (4,165) (3,833)

Other operating expenses(2) (1,928) (1,799) (1,702)

TOTAL (12,745) (12,193) (11,243)

(1) Primarily payroll taxes, but also including costs associated with defined-benefit plans (Note 4 18) and stock options (Note 4.23).(2) Other operating expenses mainly include professional fees, other purchases, operating lease expenses (262 million euro), other sub-contracting costs and

other travel expenses.

By function Fiscal 2007 Fiscal 2006 Fiscal 2005

Cost of sales (11,396) (10,957) (10,033)

Sales department costs (174) (159) (141)

General and administrative costs (1,181) (1,104) (1,002)

Other operating income and charges 6 27 (67)

TOTAL (12,745) (12,193) (11,243)

4.2 Financial income and expense


Interest expense, net of interest income (89) (95) (104)

Net foreign exchange (losses) / gains 0 (2) 1

Net impairment (losses) / reversals 1 (1) 0

Expected return on defi ned-benefi t plan assets 29 26 23

Interest cost on defi ned-benefi t plan obligation (32) (27) (27)

Change in fair value of derivative instruments (2) (4) 2

Other (7) (5) (7)

Net fi nancing costs (100) (108) (112)



4.3 Income tax expense

Income tax rate reconciliation


Profi t for the period before tax 547 505 332

Share of profi t of associates 7 8 (6)

Accounting profi t before tax 540 497 338

Tax rate applicable to Sodexho Alliance 34.43% 34.43% 34.93%

Theoretical income tax expense (186) (171) (118)

Effect of jurisdictional tax rate differences 17 9 8

Permanently non-deductible expenses or non-taxable income (9) (5) 2

Other tax repayments / (charges), net 2 (4) (8)

Tax loss carry-forwards used or recognized during the period but not recognized as a deferred tax asset in prior periods 2 6 7

Tax loss carry-forwards arising during the period but not recognized as a deferred tax asset (5) (6) (1)

Actual income tax expense (179) (171) (110)

Withholding taxes (5) (1) (1)

TOTAL INCOME TAX EXPENSE (184) (172) (111)


Current income taxes (145) (157) (112)

Adjustments to current income tax payable in respect of prior periods 1 (1) (1)

Provision for tax exposures 4 (2) (1)

Tax credits, tax losses and temporary difference carry-forwards utilized (13) (15) (38)

Sub-total: current income taxes (153) (175) (152)

Deferred taxes on temporary differences arising or reversing during the period (20) 6 42

Deferred taxes on changes in tax rates or liability for taxes at new rates (5) 0 0

Tax credits, tax losses and temporary difference carry-forwards utilized (1) (2) 0

Sub-total: deferred taxes (26) 4 42

ACTUAL INCOME TAX EXPENSE (179) (171) (110)

Deferred tax assets generated by companies reporting a tax loss in current or prior periods amounted to 1 million euro.

An accrual of 7 million euro was recorded in the consolidated fi nancial statements as of the balance sheet date to cover withholding taxes on dividends receivable.

The effective tax rate, calculated on the basis of the profi t for the period before taxes and excluding the share of profi t of associates, has decreased from 34.65% for fi scal 2006 to 34.15% for fi scal 2007.



4.4 Earnings per shareThe number of ordinary shares outstanding used in calculating basic and diluted earnings per share is shown below:

Fiscal 2007 Fiscal 2006 Fiscal 2005

Basic weighted average number of shares 156,113,136 156,050,771 155,869,510

Average dilutive effect of stock options(1) 2,078,347 1,432,620 333,165

Diluted weighted average number of shares 158,191,483 157,483,391 156,202,675

(1) The increase of approximately 0.6 million ordinary shares in the impact of dilution is essentially due to the rise in the quoted market price of Sodexho Alliance shares during fiscal 2007.

The table below shows the calculation of basic and diluted earnings per share:


Profi t for the period attributable to equity holders of the parent 347 323 212

Basic weighted average number of shares 156,113,136 156,050,771 155,869,510

Basic earnings per share 2.22 2.07 1.36

Diluted weighted average number of shares 158,191,483 157,483,391 156,202,675

Diluted earnings per share 2.19 2.05 1.36

Two stock-option plans did not have a dilutive impact during fi scal 2007 but may do so in the future, depending upon changes in the Sodexho Alliance share price.



4.5 Property, plant and equipment

4.5.1 Analysis of property, plant and equipmentThe tables below include assets held under fi nance leases.

(in millions of euro)

Land and buildings

Plant and equipment

Construction in progress and

other Total

Carrying amount - August 31, 2005 76 270 60 406

Increases during the period 6 138 40 184

Decreases during the period (1) (11) (5) (17)

Assets classifi ed as held for sale 1 1

Newly consolidated companies 5 5

Newly deconsolidated companies (11) (11)

Depreciation expense (8) (109) (14) (131)

Impairment losses recognised in profi t or loss (3) (3)

Impairment losses reversed in profi t or loss 0

Translation adjustment (3) (1) (4)

Other 1 14 (15) 0



Decreases during the period (3) (17) (8) (28)

Assets classifi ed as held for sale 0


Newly deconsolidated companies (1) (1) (2)


Impairment losses recognised in profi t or loss 0

Impairment losses reversed in profi t or loss 3 3

Translation adjustment (4) (2) (6)

Other 1 19 (21) (1)


(in millions of euro) August 31, 2007 August 31, 2006 August 31, 2005

Cost 1,207 1,184 1,110

Accumulated depreciation and impairment (767) (754) (704)

Carrying amount 440 430 406

Expenditures of 22 million euro were capitalized as construction in progress during fi scal 2007, compared with 25 million euro in fi scal 2006.

No item of property, plant and equipment is pledged as collateral for a liability.

Depreciation and impairment losses recognized in the income statement are classified as operating items and reported under either cost of sales, general and administrative costs or sales department costs.



4.5.2 Analysis of assets held under finance leases

Sodexho holds property, plant and equipment under a large number of fi nance leases on sites throughout the

world. These leases relate mainly to kitchens and kitchen equipment, offi ce equipment, and other assets; the terms are negotiated locally.

(in millions of euro) BuildingsPlant and

equipment

Construction in progress and

other Total



Decreases during the period (2) (2)


Newly consolidated companies 0

Newly deconsolidated companies 0




Translation adjustment 0

Other 0



Decreases during the period (2) (4) (6)


Newly consolidated companies 0






Other (1) 1 0



Cost 191 211 218

Accumulated depreciation and impairment (133) (143) (145)


Maturity of discounted and undiscounted minimum finance lease payments as of August 31, 2007


Undiscounted obligation

Discounted obligation

Less than 1 year 22 18

1 to 5 years 37 31

More than 5 years 10 9

TOTAL MINIMUM LEASE PAYMENTS 69 58



4.6 Goodwill

(in millions of euro )

August 31, 2006

Additions during the

period

Decreases during the

periodTranslation adjustment Other

August 31, 2007

FFMS North AmericaGross 2,139 9 (127) 1 2,022

Impairment 0 0

FFMS United Kingdom and Ireland

Gross 685 (5) 680

Impairment 0 0

FFMS Continental Europe

Gross 591 8 (1) 598

Impairment (3) (2) 1 (4)

FFMS Rest of the world

Gross 102 (2) 100

Impairment 0 0


Gross 109 9 1 119

Impairment (2) (2)

HoldingsGross 2 2

Impairment 0 0

TOTALGROSS 3,628 26 0 (135) 2 3,521

IMPAIRMENT (5) (2) 0 0 1 (6)

FFMS: Food and Facilities Management Services.

During fiscal 2007, goodwill was recognized on the acquisitions of the following companies: OCDN in the United States (9.2 million euro); Vivaboxes International (Service Vouchers and Cards activity, 8.9 million euro) and Gastro-Kanne in Germany (5.5 million euro). See note 4.24.

Following an increase in the percentage interest in Le Lido, additional goodwill of 1.8 million euro was recognized. See note 4.24.


August 31, 2005

Additions during the

period

Decreases during the

periodTranslation adjustment Other

August 31, 2006

FFMS North AmericaGross 2,259 1 (114) (7) 2,139

Impairment 0 0

FFMS United Kingdom and Ireland

Gross 677 8 685

Impairment 0 0

FFMS Continental Europe

Gross 574 16 1 591

Impairment (2) (1) (3)

FFMS Rest of the world

Gross 105 (3) 102

Impairment 0 0


Gross 92 17 109

Impairment (2) (2)

HoldingsGross 2 2

Impairment 0 0

TOTALGROSS 3,709 34 0 (108) (7) 3,628

IMPAIRMENT (4) (1) 0 0 0 (5)

FFMS : Food and Facilities Management services



4.7 Intangible assetsThe tables below show movements in intangible assets during fi scal 2007 and fi scal 2006.


Licences and software

Other intangible assets Total

Carrying amount - August 31, 2005 72 15 87

Increases during the period 17 46 63

Internally-generated assets 2 2





Amortization expense (31) (2) (33)

Impairment losses recognised in profi t or loss (1) (1)



Other 0



Internally-generated assets 6 6

Decreases during the period (2) (2)




Amortization expense (30) (17) (47)


Impairment losses reversed in profi t or loss 1 1

Translation adjustment (1) (1)

Other 2 2



Cost 298 266 200

Accumulated amortization and impairment (176) (140) (113)


Amortization and impairment losses recognized in the income statement are classifi ed as operating items and reported under either cost of sales, general and administrative costs or sales department costs.



4.8 Client investments


Carrying amount - September 1 146 138 120



Translation adjustment (8) (7) 0

Other 0 0 (1)

Carrying amount - August 31 149 146 138

4.9 Investments in associatesChanges in the Group’s share of the net assets of its associates during fi scal 2007 and fi scal 2006 are shown below:


August 31, 2006

Profi t / (loss) for

the period

Dividend paid for

the period

Changes in scope of consolida-

tion

Translation adjustment

and other items

August 31, 2007

Doyon Universal Services(1) 14.7 1.2 (0.9) (0.9) 14.1

BAS 5.5 1.4 (0.7) (0.2) 6.0

BAS 2 3.2 (2.9) (0.3) 0.0

NANA 8.1 1.2 (1.1) (0.5) 7.7

RMPA Holdings Ltd 2.5 0.1 0.7 3.3

South Manchester Healthcare (Holdings) Ltd 1.4 0.6 (1.0) 0.8 1.8

Addiewell Prison (Holdings) Ltd(2) 0.9 0.9

Peterborough Prison Management Holdings Ltd(2) 0.3 0.6 0.9

Catalyst Healthcare (Manchester) Holdings Ltd 0.2 0.7 0.9

Mercia Healthcare (Holdings) Ltd 0.1 0.4 0.1 0.6

Other 0.6 0.2 0.2 1.0

TOTAL 36.3 6.1 (3.7) (2.9) 1.4 37.2

(1) Includes goodwill of €5.8 million as of August 31, 2007.(2) Companies covered by a provision for negative net assets as of August 31, 2006.


August 31, 2005


the period

Dividend paid for

the period


tion


and other items

August 31, 2006

Doyon Universal Services(1) 15.0 1.0 (0.5) (0.8) 14.7

BAS 4.8 0.7 5.5

BAS 2 3.2 3.2

NANA 7.6 0.9 (0.4) 8.1

RMPA Holdings Ltd 1.2 0.4 0.9 2.5

South Manchester Healthcare (Holdings) Ltd(2) 2.3 (0.2) (0.7) 1.4

Other 0.3 0.8 (0.4) 0.2 0.9

TOTAL 32.1 6.1 (1.1) 0.2 (1.0) 36.3

(1) Includes goodwill of €5.8 million as of August 31, 2006.(2) South Manchester had negative net assets as of August 31, 2005, which were covered by a provision.



Sodexho’s share of the negative net assets of associates is recognized as a liability, in the form of a provision (see note 4.19.)

This provision comprises the following:


August 31, 2006


the period

Dividend paid for

the period


tion


and other items

August 31, 2007

SERCO Sodexho Defence Services (3.6) 1.6 (2.0)

Peterborough Prison Management Holdings Ltd(1) (1.2) 1.2 0.0

Agecroft Prison Management Ltd (2.9) (0.1) (3.0)

Catalyst Healthcare (Roehampton) Holdings Ltd (3.0) 0.3 0.6 (2.1)

Ashford Prison Services Holdings Ltd (1.5) 1.4 (0.1)

HpC King’s College Hospital (Holdings) Ltd (1.9) (0.7) (2.6)

Enterprise Healthcare Holdings Ltd (0.7) 0.2 (0.5)

Addiewell Prison (Holdings) Ltd(1) (1.1) 1.1 0.0

Other (0.3) (0.1) 0.2 0.1 (0.1)

Provision for negative net assets (16.2) 1.0 0.0 0.2 4.6 (10.4)

(1) Companies with positive net assets as of August 31, 2007.


August 31, 2005


the period

Dividend paid for

the period


tion


and other items

August 31, 2006

SERCO Sodexho Defence Services (4.4) 0.7 0.1 (3.6)

Peterborough Prison Management Holdings Ltd (3.3) 1.2 0.9 (1.2)

Agecroft Prison Management Ltd (2.9) (2.9)

Catalyst Healthcare (Roehampton) Holdings Ltd (2.8) 0.2 (0.4) (3.0)

Ashford Prison Services Holdings Ltd (2.2) 0.7 (1.5)

HpC King’s College Hospital (Holdings) Ltd (1.5) (0.4) (1.9)

South Manchester Healthcare (Holdings) Ltd(1) (1.5) 1.5 0.0

Enterprise Healthcare Holdings Ltd (0.7) (0.7)

Addiewell Prison (Holdings) Ltd (1.1) (1.1)

Other (0.4) (0.1) 0.2 (0.3)

Provision for negative net assets (19.7) 1.6 0.0 0.0 1.9 (16.2)

(1) South Manchester had negative net assets as of August 31, 2005, which were covered by a provision.



4.10 Impairment of assets

Impairment losses recognized in fiscal 2006 and fiscal 2007

(in millions of euro) August 31, 2006 Recognized Reversed Other August 31, 2007

Goodwill 5 2 (1) 6

Intangible assets 1 (1) 0

Property, plant and equipment 4 (3) 1

Asset impairment 10 2 (4) (1) 7

(in millions of euro) August 31, 2005 Recognized Reversed Other August 31, 2006

Goodwill 4 1 5

Intangible assets 0 1 1

Property, plant and equipment 1 3 4

Asset impairment 5 5 0 0 10

Impairment losses recognized in the income statement are classifi ed as operating items and reported under either cost of sales, general and administrative costs or sales department costs.

Assets with indefinite useful lives were tested for impairment as of August 31, 2007 using the methods described in note 2.8.2.

The table below gives key fi nancial data for Sodexho’s principal associates (in millions of euro, based on financial statements adjusted for the purposes of consolidation by Sodexho; figures are for the associate as a whole, rather than Sodexho’s percentage interest):

Country of operations

% interest Assets Liabilities Equity Revenue

Profi t/ (loss) for

the period

RMPA Holdings Ltd* UK 14% 1,006 983 23 283 1

Catalyst Healthcare (Manchester) Holdings Ltd* UK 25% 607 603 4 112 3

Healthcare Support (North Staffs) Holdings Ltd* UK 0.0% 485 485 0 90 0

Catalyst Healthcare (Romford) Holdings Ltd* UK 25% 398 398 0 43 0

BAS (Chile)* Chile 33.33% 219 201 18 21 4

HpC King’s College Hospital (Holdings) Ltd* UK 25% 146 156 (10) 19 (3)

Peterborough Prison Management Holdings Ltd* UK 33.33% 136 133 3 32 1

South Manchester Healthcare (Holdings) Ltd* UK 25% 133 126 7 26 2

Catalyst Healthcare (Roehampton) Holdings Ltd* UK 25% 126 134 (8) 13 1

Mercia Healthcare (Holdings) Ltd* UK 25% 117 115 2 10 2

Addiewell Prison (Holdings) Ltd* UK 33.33% 102 99 3 64 0

Ashford Prison Services Holdings Ltd* UK 33.33% 99 99 0 25 0

Enterprise Healthcare Holdings Ltd* UK 10% 72 78 (6) 16 0

Agecroft Prison Management Ltd* UK 50% 71 77 (6) 28 0

Pinnacle Schools (Fife) Holdings Ltd* UK 10% 69 68 1 9 1

Enterprise Education Holdings Conwy Ltd* UK 10% 62 59 3 5 0

NANA (Sodexho, Inc.) USA 43.6% 48 26 22 118 5

Enterprise Civic Buildings (Holdings) Ltd* UK 10% 39 37 2 2 0

Doyon Universal services JV USA 49.9% 26 2 24 53 3

Serco Defence Services PTY Australia 50% 25 29 (4) 100 3

* Project companies established in connection with Public-Private Partnership (PPP) contracts (see 2.3.2).



The main assumptions used were:

FFMS France

FFMS North America

FFMS United Kingdom

FFMS Sweden

Discount rate 8.3% 8.3% 8.3% 8.3%

Long-term growth rate 2% 2.5% 2.5% 2 %

For other countries and the Service Vouchers and Cards activity, the discount rate applied to future cash fl ows was 8.3% (uplifted by up to 65% for countries regarded as having a higher degree of risk), and the long-term growth rate used to extrapolate terminal value from the third year of the business plan was 2% (with an additional increase for subsidiaries in developing countries).

Sensitivity analysisSodexho has analyzed the sensitivity of impairment test results to differences in long-term growth rates.

This analysis had no effect on the conclusions of impairment tests.

The Group has also verifi ed that the use of pre-tax discount rates applied to pre-tax cash fl ows would not materially change the impairment test results.

4.11 Financial assets

Non current(in millions of euro) August 31, 2007 August 31, 2006 August 31, 2005

Available-for-sale fi nancial assets

Investments in non-consolidated companies

Cost 39 43 41



Other investment securities

Cost 0 0 0

Impairment 0 0 0


Loans and receivables

Receivables from investees

Cost 34 26 22

Impairment (1) (1) 0


Loans and deposits

Cost 14 13 12

Impairment 0 0 0


Financial assets at fair value through profi t and loss

Other fi nancial assets at fair value 3 0 0

TOTAL NON-CURRENT FINANCIAL ASSETS

Cost 90 82 75





Principal non-consolidated equity investmentsThe Group holds an 18.50% interest in Bellon SA, the parent company of Sodexho Alliance, carried at a value of 32.4 million euro. This available-for-sale fi nancial asset is an investment in a company that does not have a quoted

market price on an active market, and whose value cannot be reliably measured. In addition, this investment is not a liquid debt instrument. Consequently, it is carried at cost.

The Group also holds a 9.3% interest in Leoc Japan Co, carried at a value of 2.3 million euro. This investment is measured at its quoted stock market price.

Current(in millions of euro) August 31, 2007 August 31, 2006 August 31, 2005

Available-for-sale fi nancial assets

Marketable securities with a maturity greater than 3 months

Cost 0 0 1

Impairment 0 0 0


Restricted cash and other fi nancial assets: Service Vouchers and Cards activity

Cost 454 423 326

Impairment 0 0 0


Loans and receivables

Loans and deposits

Cost 13 19 6



TOTAL CURRENT FINANCIAL ASSETS

Cost 467 442 333



Restricted cash, included in “Restricted cash and fi nancial assets related to the Service Vouchers and Cards activity”, amounts to 293 million euro. The main components of this fi gure are funds set aside to comply with regulations governing the issuance of service vouchers in France (193 million euro) and Romania (49 million euro); guarantee funds for affi liates in Mexico (9 million euro); and contractual guarantees given to public-sector clients in Venezuela (23 million euro).

Gains and losses recognized directly in equity on available-for-sale fi nancial assets during fi scal 2007 represented a net loss of (2) million euro.

Gains and losses reversed out of equity and recognized in the income statement in fi nancial income or expense during fi scal 2007 were immaterial.

Movement in current and non-current financial assets

(Carrying value)

August 31, 2006

Increase / (decrease) during the

period Impairment

Change in scope of

consolida-tion


and other items

August 31, 2007

Available-for-sale assets 460 27 5 492

Loans and receivables 55 1 2 58

Financial assets at fair value through profi t and loss 0 3 3

TOTAL 515 28 0 0 10 553



4.12 Inventories


August 31, 2006

Increase / (decrease) during the

period

Change in scope of

consolida-tion


and other items

August 31, 2007

Cost 169 21 0 (4) 186

Impairment (1) (1)

Carrying amount 168 21 0 (4) 185

Inventories mainly comprise food and other high-throughput consumables. Changes in inventories are included in cost of

sales, sales department costs or general and administrative costs, depending on the nature of the inventory.

No inventories are pledged as collateral for a liability.

4.13 Trade and other receivables


Gross value as of August

31, 2007

Impairment as of August

31, 2007

Carrying amount as of August 31, 2007



Net plan assets* 2 0 2 0 2

Other non-current assets 11 0 11 18 16

Total other non-current assets 13 0 13 18 18

Advances to suppliers 6 0 6 9 5

Trade receivables 1,841 (66) 1,775 1,645 1,508

Other operating receivables 165 (5) 160 173 175

Prepaid expenses 145 0 145 78 57

Non-operating receivables 1 0 1 2 5

Assets held for sale 2 0 2 2 0

TOTAL TRADE AND OTHER RECEIVABLES 2,160 (71) 2,089 1,909 1,750

* For details of net plan assets, see note 4.18 “Long-term employee benefits”.

4.14 Cash and cash equivalents


Marketable securities 705 373 433

Cash 705 669 516

Sub-total: cash and cash equivalents 1,410 1,042 949

Bank overdrafts (33) (36) (21)

NET CASH AND CASH EQUIVALENTS 1,377 1,006 928

Marketable securities, totaling 705 million euro, comprised:


Short-term notes 139 97 199

Term deposits 377 117 97

Listed bonds 27 31 45

Mutual funds and other 162 128 92

Total marketable securities 705 373 433

Mutual funds represent cash investments, primarily invested in the euro zone.



4.15 Statement of changes in shareholders’ equity

Shares outstanding Addi-tional

paid in capital

Cumu-lative trans-lation

Conso-lida-

ted reser-

Retained earnings

Treasury shares Share-based

payment cost

Other reser-

ves

Equity holders

of the parent

Mino-rity

inte-rests TotalQuantity

Com-mon

stock Quantity Reserve

Shareholders’ equity as of August 31, 2005* 159,026,413 636 1,186 10 (416) 708 (3,435,900) (112) 10 11 2,033 18 2,051

Common stock issued 0

Dividends paid (excluding treasury shares) (117) (117) (10) (127)

Sodexho Alliance SA profi t for prior period (77) 77 0

Profi t for current period 323 323 10 333

Changes in scope of consolidation 0

Net sale/(purchase) of treasury shares 350,115 (3) (3) (3)

Share-based payment cost 8 8 8

Tax on share-based payment cost 11 11 11

Change in cumulative translation adjustment and other movements (91) (91) (1) (92)

Items recognized directly in equity (35) (35) (35)

Shareholders’ equity as of August 31, 2006* 159,026,413 636 1,186 (81) (170) 668 (3,085,785) (115) 29 (24) 2,129 17 2,146

Common stock issued 0 0

Dividends paid (excluding treasury shares) (149) (149) (10) (159)

Sodexho Alliance SA profi t for prior period (114) 114 0 0

Profi t for current period 347 347 16 363

Changes in scope of consolidation 0 1 1

Net sale/(purchase) of treasury shares (3,828) (49) (49) (49)

Share-based payment cost 13 13 13

Tax on share-based payment cost 16 16 16

Change in cumulative translation adjustment and other movements (109) (109) (1) (110)

Items recognized directly in equity 79 79 79

Shareholders’ equity as of August 31, 2007 159,026,413 636 1,186 (190) 63 633 (3,089,613) (164) 58 55 2,277 23 2,300

* During fiscal 2007, the Group identified 26 million euro of deferred tax liabilities that should have been recognized in the IFRS transition balance sheet as of September 1, 2004, relating to deductible goodwill in the United States. The Group has adjusted its deferred tax liabilities and shareholders’ equity as of August 31, 2005 and as of August 31, 2006 to reflect this amount.



The Group holds 2,878,313 Sodexho Alliance shares with a carrying amount of 146.6 million euro to cover its obligations under stock option plans awarded to Group employees. These treasury shares are deducted from equity as required by IAS 32.

During the period, the Group acquired Sodexho Alliance shares with a value of 212 million euro, and delivered Sodexho Alliance shares with a value of 151 million euro, on the exercise of stock options by employees and under the liquidity contract.

•

•

The Group also holds 211,300 Sodexho Alliance shares with a carrying amount of 10.6 million euro under the liquidity contract with Oddo Corporate Finance that became effective July 10, 2006. These treasury shares are deducted from equity as required by IAS 32.

The par value of Sodexho Alliance shares is 4 euro.

The total dividend payout in fi scal 2007 was 149 million euro, representing a dividend of 0.95 euro per share.

•

Transactions recognized directly in equity are shown in the table below:


Change in fair value of fi nancial instruments

Change in employee benefi ts Other

Total other

reserves

Shareholders’ equity as of August 31, 2005 5 6 0 11

Items recognized directly in equity (7) (42) 0 (49)

Tax on items recognized directly in equity 1 12 1 14

Shareholders’ equity as of August 31, 2006 (1) (24) 1 (24)

Items recognized directly in equity 8 103 0 111

Tax on items recognized directly in equity (3) (29) 0 (32)

Shareholders’ equity as of August 31, 2007 4 50 1 55



4.16 Borrowings

(en millions d’euros)

August 31, 2007 August 31, 2006 August 31, 2005

CurrentNon-

current CurrentNon-

current CurrentNon-

current

Bond issues

Euro 39 1,775 30 1,297 30 1,295

Bank borrowings*

U.S. dollar 37 1 6 480 3 487

Euro 8 12 4 15 2 44

Other currencies 2 0 4 5 8 4

47 13 14 500 13 535

Finance lease obligations

U.S. dollar 0 0 0 0 1 1

Euro 15 34 19 44 24 50


18 40 22 49 28 55

Other borrowings

Euro 7 9 1 4 12 4


7 11 2 6 14 6

TOTAL 111 1,839 68 1,852 85 1,891

* Excluding the impact of the swaps described in note 4.17.

For borrowings other than bond issues, amortized cost is equivalent to historical cost since no signifi cant transaction costs are incurred.



Bond issues

August 31, 2006 Increases

Repay-ments

Discoun-ting effect


August 31, 2007

1999 bond issue - €300 million

Principal 300 (13) 287

Debt issuance costs (1) (1)

Accrued interest 6 6

TOTAL 305 0 (13) 0 0 292

Effective rate 4.787% 4.794%

2002 bond issue - €1 billion

Principal 1,000 (10) 990

Debt issuance costs (4) 1 (3)


TOTAL 1,022 0 (10) 1 0 1,013

Effective rate 6.035% 6.037%

2007 bond issue - €500 million

Principal 500 500

Debt issuance costs (1) (1)


TOTAL 509 0 0 0 509

Effective rate 4.551%

TOTAL 1,327 509 (23) 1 0 1,814

300 million euro bond issueOn March 16, 1999, Sodexho Alliance issued 300 million in euro bonds.

The bonds are redeemable at par on March 16, 2009 and bear interest at a rate of 4.625% per annum, payable annually on March 16.

On March 30, 2007, Sodexho Alliance redeemed bonds from this issue to a total nominal value of 12.7 million euro.

1,000 million euro bond issueOn March 25, 2002, Sodexho Alliance issued bonds of 1,000 million euro, redeemable at par on March 25, 2009.

The bonds bear interest at an annual rate of 5.875%, payable annually on March 25.

On March 30, 2007, Sodexho Alliance redeemed bonds from this issue to a total nominal value of 9.7 million euro.

500 million euro bond issueOn March 30, 2007, Sodexho Alliance carried out a bond issue of 500 million euro, redeemable at par on March 30, 2014.


None of these bond issues is subject to financial covenants.

Other borrowings

April 2005 multi-currency revolving credit facilityOn April 29, 2005, Sodexho Alliance and Sodexho Inc contracted a multi-currency revolving credit facility of up to 460 million euro plus 700 million US dollars. The expiry date of this facility was initially set at April 29, 2010, but may be extended at the request of Sodexho Alliance (subject to consent from the lenders), initially to April 29, 2011 and subsequently to April 26, 2012. On March 27, 2006, the lenders agreed to an initial extension of the facility to April 29, 2011. On April 18, 2007, Sodexho obtained a further extension of the facility from the lenders, to April 26, 2012.

As of August 31, 2007, no funds were drawn down under this facility, which was being used solely for the issuance of bank guarantees of 113 million US dollars (83 million euro).

This credit facility is not subject to any fi nancial covenants, but requires the borrower to comply with the standard clauses contained in this type of syndicated credit agreement. In the event of non-compliance with these clauses, bankers representing at least two-thirds of the agreed facility are entitled to demand early repayment of the balance outstanding under the facility. Early repayment of the facility would also entitle holders of the March 2002 1 billion euro bond issue and the March 2007 500 million euro bond issue to demand early redemption of their bonds.



Interest rateIn order to comply with Group fi nancing policy, substantially all borrowings are at fixed rates of interest. Where acquisition fi nancing is arranged in a currency other than that of the acquired entity, the debt is hedged by the use of currency swaps.

As of August 31, 2007, 97% of Sodexho’s borrowings were at fi xed rate. The average rate of interest as of the same date was 5.6%.

Maturity of borrowings

August 31, 2007Less than

1 year 1 to 5 yearsMore than

5 years Total

Bond issues 39 1,276 499 1,814

Bank borrowings * 47 7 6 60

Finance lease obligations 18 31 9 58

Other borrowings 7 11 0 18

TOTAL 111 1,325 514 1,950


August 31, 2006Less than

1 year 1 to 5 yearsMore than

5 years Total

Bond issues 30 1,297 0 1,327

Bank borrowings * 14 494 6 514

Finance lease obligations 22 37 12 71


TOTAL 68 1,832 20 1,920


4.17 Financial instruments

Financial instruments used to hedge intra-group loans in foreign currencies


Derivative fi nancial instruments asset 0 42 40

Derivative fi nancial instruments liability 1 2 2

Net derivative fi nancial instruments (1) 40 38



August 31, 2007

(equivalent value in millions of euro) NoteBorrowings

in EURBorrowings

in USDBorrowings

in GBP

Borrowings in other

currencies Total

UK borrowing (GBP 83 million) (1)

Due to the bank GBP 83 million 122 122

Due from the bank EUR 123 million (123) (123)

Fair value adjustment 0

Sodexho Skandinavian Holding AB borrowings (SEK 150 million) (2)

Due to the bank SEK 150 million 16 16



Sodexho, Inc. borrowing (USD 550 million) (3)

Due to the bank USD 550 million 403 403


Fair value adjustment 1 1

Borrowings by other subsidiaries (aggregate) 6 (5) 1

TOTAL FINANCIAL INSTRUMENTS (541) 409 122 11 1

August 31, 2006

(equivalent value in millions of euro) NoteBorrowings

in EURBorrowings

in USD Borrowings

in GBP

Borrowings in other

currencies Total

UK borrowing (GBP 83 million) (1)

Due to the bank GBP 83 million 123 123



Sodexho Skandinavian Holding AB borrowings (SEK 198.6 million) (2)

Due to the bank SEK 198.6 million 21 21



Sodexho Inc borrowing (USD 111.7 million) (3)

Due to the bank USD 114.9 million 89 89

Due from the bank EUR 129.6 million (130) (130)

Fair value adjustment (1) (1)

Borrowings by other subsidiaries (aggregate) (10) 12 0 2

TOTAL FINANCIAL INSTRUMENTS (285) 101 123 21 (40)

1) A currency swap (GBP83 million for 123 million euro) has been contracted to hedge an intragroup loan of GBP83 million. This swap will expire on February 28, 2008.

2) Currency swaps (SEK150 million for 16 million euro) have been contracted to hedge in full intragroup loans of the same amount to Sodexho Scandinavian Holding AB. This swap will expire on August 29, 2008.

3) The cross currency swap contracted in March 2002 (6.325% for 6.5775%, euros for US dollars) expired on March 25, 2007. The USD 550 million intragroup loan from Sodexho Alliance to Sodexho, Inc. is now hedged by cross currency swaps expiring February 28, 2008 (total amount: USD 550 million for 403 million euro).

The Sodexho Group has no material interest rate swaps that are accounted for as cash fl ow hedges.

No embedded derivatives have been identifi ed by the Group.



Fair value of financial instruments

August 31, 2007

(in millions of euro) Carrying amount Fair value Difference

Financial assets

Investments in non-consolidated companies 38 38 0

Receivables from investees 33 33 0

Other investment securities 0 0 0

Loans and deposits 14 14 0

Other non-current fi nancial assets 3 3 0

Total non-current fi nancial assets 88 88 0

Associates 37 37 0

Derivative instruments 0 0 0

Loans and other current fi nancial assets 11 11 0

Financial assets: Service Vouchers and Cards activity 454 454 0

Marketable securities 705 705 0

TOTAL FINANCIAL ASSETS 1,295 1,295 0

Financial liabilities

Bond issues

2007 €500 million bond issue 509 491 (18)

2002 €1 billion bond issue 1,013 1,034 21

1999 €300 million bond issue 292 294 2

Sub-total 1,814 1,819 5

Bank borrowings 60 60 0

Derivative instruments 1 1 0

Bank overdrafts 33 33 0

Other borrowings 18 18 0

TOTAL FINANCIAL LIABILITIES 1,926 1,931 5

4.18 Long-term employee benefi ts


Net plan assets* (2) 0 (2)

Defi ned-benefi t plans 134 260 224

Other long-term employee benefi ts 98 90 86

Employee benefi ts 232 350 310

* Reported in “Other non-current assets” in the balance sheet.



4.18.1 Post-employment benefits

Defined-contribution plansUnder a defi ned-contribution plan, periodic contributions are made to a separate entity that is responsible for the administrative and fi nancial management of the plan. Under such a plan, the employer is relieved of any future liability, as the external entity is responsible for paying benefi ts to employees as they fall due.

Contributions made by the Sodexho Group are expensed in the period to which they relate.

Defined-benefit plansThe characteristics of Sodexho’s principal defi ned-benefi t plans are described below:

In France, the obligation primarily represents lump-sum benefi ts payable on retirement if the employee is still with the company at retirement age.

These obligations are covered by specifi c provisions in the balance sheet.

In the United Kingdom, Sodexho’s obligation relates to a complementary retirement plan, partially funded by externally-held assets, and calculated on the basis of:

a percentage of fi nal basic salary, in the case of managerial grade staff allocated to the private sector;

benefi ts comparable to those offered in the public sector, in the case of managerial grade staff allocated to the public sector.

•

•

•

•

Sodexho closed this plan to new employees effective July 1, 2003, and increased the level of contributions in order to cover the shortfall in the fund.

In Continental Europe other than France, the main defi ned-benefi t plans are as follows:

in the Netherlands, certain employees are entitled to complementary retirement or early retirement benefi ts;

in Italy, there is a legal obligation to pay a lump-sum retirement benefi t (“TFR”). Until August 31, 2006, fully vested employee rights were valued and discounted as specifi ed by law, and recognized in full as a liability.

At the end of December 2006, the Italian parliament approved a reform of the TFR system, to be implemented in 2007, which transforms this retirement benefi t plan into a defi ned contribution plan. For the period from January 1, 2007 through June 30, 2007, staff employed as of December 31, 2006 were required to choose between various defined-contribution plans, in connection with the employee rights acquired as of January 1, 2007. The prior obligations remain on the balance sheet.

Sodexho also contributes to multi-employer plans, mainly in Sweden and the United States. These plans are accounted for as defi ned-contribution plans.

•

•

•

Amounts shown in the balance sheet for defi ned-benefi t plans are as follows:


Net plan assets* (2) 0 (2)

Defi ned-benefi t plans** 134 260 224

* Reported in “Other non-current assets” in the balance sheet.** Reported as a liability in the balance sheet under “Employee benefits”.

These amounts break down as follows:


Present value of funded obligations 551 591 511

Fair value of plan assets (509) (434) (388)

Present value of partially funded obligations 42 157 123

Present value of unfunded obligations 91 103 99

Unrecognized past service cost (1) (1) 0

Other unrecognized amounts 0 1 0

Net obligation in the balance sheet 132 260 222

As described in note 2.1.1., Sodexho elected to apply the option offered in paragraph 93A of the amended IAS 19, issued in December 2004, which allows actuarial gains and

losses arising during the period to be recognized outside the income statement.



Actuarial gains and losses reported in the statement of changes in shareholders’ equity as of August 31, 2006 represented a net actuarial loss of 33 million euro.

Cumulative actuarial gains and losses recognized in equity as of August 31, 2007 represented a net actuarial gain of 68 million euro.

Plan assets comprise:


Equities 218 275 262

Government bonds 237 69 80

Corporate bonds 36 70 24

Insurance policies 5 11 0

Real estate 11 2 13

Cash 2 7 9

TOTAL 509 434 388

The amount reported in the income statement for defi ned-benefi t plans comprises:


Current service cost 38 35 34

Interest cost 32 27 27

Expected return on plan assets (29) (26) (23)

Curtailments and settlements (2) 0 0

Amortization of unrecognized past service cost & other 0 1 0

Net expense 39 37 38

This net expense is recorded on the following lines:

25 million euro (26 million euro in fi scal 2006) in cost of sales;

1 million euro (1 million euro in fi scal 2006) in sales department costs;

•

•

10 million euro (9 million euro in fiscal 2006) in administrative costs;

the balance (fi nancing cost and expected return on plan assets) in fi nancial income or expense (see note 4.2 ).

•

•

Changes in the present value of the defi ned-benefi t plan obligation since September 1, 2006 are shown below:

Fiscal 2007

Obligation as of September 1 694

Current service cost 38

Interest cost 32

Actuarial gains/losses (83)

Past service cost 0

Effect of curtailments and settlements (4)

Contributions made by plan members 6

Benefi ts paid from plan assets (15)

Benefi ts paid other than from plan assets (24)

Business combinations 0

Translation differences (4)

Other 2

Obligation as of August 31 642

Of the 83 million euro of net actuarial gains arising in fi scal 2007, a loss of 7 million euro was due to experience adjustments (compared with a loss of 1 million euro from experience adjustments in fi scal 2006).



Changes in the fair value of plan assets since September 1, 2006 are shown below:

Fiscal 2007

Fair value of assets as of September 1 434

Expected return on assets 29

Employer’s contributions 40

Actuarial gains/losses 18

Effect of curtailments and settlements (2)

Contributions made by plan members 6

Benefi ts paid from plan assets (15)

Business combinations 0

Translation differences (3)

Other 2

Fair value of assets as of August 31 509

The following assumptions were used for actuarial valuations for the principal countries as of August 31, 2007 and 2006:

As of August 31, 2007 FranceThe

NetherlandsUnited

Kingdom Italy

Discount rate* 5.00%-5.30% 5.30% 5.70% 5.10%

Salary infl ation rate** 2.50%-2.60% 3.75% 3.60% N/A

General infl ation rate 2.00% 2.00% 3.10% 2.00%

Rate of return on plan assets 4.00%-4.50% 5.40% 6.90% N/A

Amount of obligation in balance sheet 23 4 32 46

* In fiscal 2007, discount rates in each country have been adapted to reflect the term of the plans.** The salary inflation rate disclosed includes general inflation.

As of August 31, 2006 FranceThe

NetherlandsUnited

Kingdom Italy

Discount rate 4.50% 4.50% 5.10% 4.50%

Salary infl ation rate* 2.50%-2.60% 3.75% 4.25% 4.00%

General infl ation rate 2.00% 2.00% 3.00% 2.00%

Rate of return on plan assets 4.00% 5.40% 6.70% N/A

Amount of obligation in balance sheet 25 10 138 56

* The salary inflation rate disclosed includes general inflation.

The expected rates of return on plan assets were determined by reference to market expectations of returns for each asset class over the life of the related obligation. For each fund, the expected rate of return is weighted to refl ect the proportion of each asset class held by the relevant fund.

The actual return on plan assets in fiscal 2007 was 47 million euro, compared with an expected return of 29 million euro.

Based on estimates derived from reasonable assumptions, Sodexho will pay 73 million euro into defined-benefit plans in fi scal 2008, including GBP35 million in the United Kingdom.

4.18.2 Other employee benefitsOther employee benefi ts mainly comprise a liability related to a deferred compensation program in the United States and obligations relating to long-service awards.



Amounts reported in the balance sheet for other long-term employee benefits


Other long-term employee benefi ts 98 90 86

4.19 Provisions


August 31, 2006 Charged Utilized

Released without corres-

ponding charge


and other items

Changes in scope

of consoli-dation

Discouting impact on long-term

provisionsAugust 31,

2007

Tax and social security exposures 30 12 (3) (7) (2) 30

Employee claims and litigation 14 11 (3) (3) 19

Contract termination and loss-making contracts 32 5 (6) (2) (1) 1 29

Client/supplier claims and litigation 9 3 (5) 0 (1) 6

Negative net assets of associates* 16 0 (6) 0 10

Other provisions 7 4 (1) (4) 2 8

TOTAL 108 35 (24) (16) (2) 0 1 102

* See note 4.9.

The current/non-current split of provisions is as follows:


August 31, 2007 August 31, 2006 August 31, 2005

Current provisions

Non-current provisions

Current provisions


Current provisions


Tax and social security exposures 17 13 9 21 8 16

Employee claims and litigation** 14 5 11 3 78 2

Contract termination and loss-making contracts 10 19 12 20 7 7

Client/supplier claims and litigation 3 3 5 4 1 4

Negative net assets of associates* 0 10 0 16 0 20

Other provisions 5 3 3 4 3 4

TOTAL 49 53 40 68 97 53

* See note 4.9.** See note 4.28.

The total expense recognized with respect to these benefi ts in fi scal 2007 was 10 million euro. This fi gure includes 3 million euro for a deferred compensation program in the United States, reported in fi nancial expense.



4.20 Trade and other payables


Other non-current liabilities 79 101 80

TOTAL OTHER NON-CURRENT LIABILITIES 79 101 80

Advances from clients 349 217 174

Trade payables 1,228 1,138 1,123

Employee-related liabilities 703 687 573

Tax liabilities 188 176 198

Other operating liabilities 56 71 82

Deferred revenues 65 50 38

Other non-operating liablities 29 30 9

TOTAL TRADE AND OTHER PAYABLES 2,618 2,369 2,197

Employee-related liabilities include short-term employee benefi t obligations.

4.21 Deferred taxes

(in millions of euro) August 31, 2007 August 31, 2006* August 31, 2005*

Deferred tax assets 136 241 224

Deferred tax liabilities (35) (75) (80)

Deferred tax assets (net) 101 166 144


Deferred tax assets not recognized because their recovery is regarded as not probable total 36 million euro, including 7 million euro of tax loss carry-forwards generated by subsidiaries prior to their acquisition.

Sources of deferred taxes are as follows:

(in millions of euro) August 31, 2007 August 31, 2006* August 31, 2005*

Temporary differences (net)

- Employee-related liabilities 154 203 194

- Fair value of fi nancial instruments 1 1 (2)

- Other temporary differences (59) (45) (56)

- Tax loss carry-forwards 5 7 8

Deferred tax assets (net) 101 166 144


Temporary differences on employee-related liabilities relate primarily to post-employment benefi ts. Virtually all of the reduction in deferred tax assets on employee-related liabilities is due to the sharp reduction in the Group’s post-employment benefi t obligation compared with fi scal 2006 (minus 128 million euro, see note 4.18.1 ).

Net deferred tax liabilities recognized directly in shareholders’ equity as of August 31, 2007 totaled 27 million euro.



4.22 Cash fl ow statement

Changes in working capital


August 31, 2006

Increase / (decrease)


and other items


tionAugust 31,

2007

Other non-current assets 18 (3) (2) 0 13

Inventories 168 21 (4) 0 185

Advances to suppliers 9 (3) 0 0 6

Trade receivables, net 1,645 146 (19) 3 1,775

Other operating receivables 173 1 (15) 1 160

Prepaid expenses 78 69 (2) 0 145


Operating receivables 1,907 213 (36) 4 2,088

Restricted cash and fi nancial assets: Service Vouchers and Cards activity 423 26 5 0 454

Change in asset items in working capital 2,516 257 (37) 4 2,740

Receivables related to investing and fi nancing activities 2 (1) 0 0 1

Employee benefi ts 349 (9) (108) 0 232

Other non-current liabilities 81 3 (5) 0 79

Advances from clients 217 130 2 0 349

Trade payables 1,138 104 (25) 11 1,228

Tax and employee-related liabilities 863 48 (20) 0 891

Other operating liabilities 71 (5) (10) 0 56

Deferred revenues 50 13 2 0 65

Operating liabilities 2,339 290 (51) 11 2,589

Vouchers payable 1,127 161 2 0 1,290

Change in liability items in working capital 3,896 445 (162) 11 4,190

Liabilities related to investing and fi nancing activities 50 (21) 0 0 29




August 31, 2005



and other items


tionAugust 31,

2006

Other non-current assets 18 3 (3) 0 18

Inventories 176 (2) (6) 0 168

Advances to suppliers 5 4 0 0 9

Trade receivables, net 1,508 167 (31) 1 1,645

Other operating receivables 175 12 (14) 0 173

Prepaid expenses 57 9 11 1 78


Operating receivables 1,745 193 (33) 2 1,907

Restricted cash and fi nancial assets: Service Vouchers and Cards activity 326 107 (12) 2 423

Change in asset items in working capital 2,265 301 (54) 4 2,516

Receivables related to investing and fi nancing activities 5 (1) (2) 0 2

Employee benefi ts 310 7 31 1 349

Other non-current liabilities 80 13 (12) 81

Advances from clients 174 50 (3) (4) 217

Trade payables 1,123 33 (22) 4 1,138

Tax and employee-related liabilities 771 88 (1) 5 863

Other operating liabilities 82 20 (32) 1 71

Deferred revenues 38 0 12 0 50

Operating liabilities 2,188 191 (46) 6 2,339

Vouchers payable 1,001 131 (20) 15 1,127

Change in liability items in working capital 3,579 342 (47) 22 3,896

Liabilities related to investing and fi nancing activities 9 40 1 0 50



Changes in borrowings


August 31, 2006


New leases

Accrued interest


tion


and other items

August 31, 2007

Bond issues 1,327 476 9 2 1,814

Bank borrowings 514 (435) (3) (1) (15) 60

Finance lease obligations 71 (23) 10 58


Derivative instruments (40) 54 1 (14) 1

Total borrowings 1,880 76 10 7 (1) (21) 1,951


August 31, 2005


New leases

Accrued interest


tion


and other items

August 31, 2006

Bond issues 1,326 1 1,327

Bank borrowings 548 (17) 2 7 (26) 514

Finance lease obligations 82 (29) 19 (1) 71

Other borrowings 20 (12) 8

Derivative instruments (38) (2) (40)

Total borrowings 1,938 (48) 19 2 6 (37) 1,880

4.23 Share-based paymentThe Sodexho Alliance Board of Directors has granted payment to employees in the form of Sodexho Alliance shares under a number of stock option plans.

4.23.1 Principal features of stock option plans

Vesting periodRights under option plans granted after January 2003 vest in 25% tranches over a four-year period. The options have a contractual life of six years.

Options granted under the “B” plans in January 2002, September 2002 and October 2002 vest four years after the date of grant and have a contractual life of six, fi ve and fi ve-and-a-half years respectively.

Options granted before January 2003 under “A” plans vest four years after the date of grant and have a contractual life of fi ve years.

Conditions for exerciseNone of the outstanding stock option plans is contingent on performance targets.

4.23.2 Valuation model and assumptions used

Estimation of fair value at date of grantThe fair value of options granted and settled by delivery of equity instruments is estimated at the date of grant using a binomial model, taking account of the terms and conditions of grant and assumptions about exercise behavior.



As well as the exercise price of the stock option plans described in note 4.23.3., the table below shows the data used in the valuation model for each plan measured under IFRS 2.

Date of grant

Expected volatilty

(%)

Contractual life

(years)

Risk-free interest rate (%)

Expected dividend yield (%)

Expected annual

forfeiture (%)

Expected dividend

growth (%)

Market risk

premium (%)

Expected life (years)

January 20, 2004 35.25% 6 3.54% 2.67% 2.00% 7.80% 5% 5

January 18, 2005 33.57% 6 3.35% 3.18% 1.00% 6.45% 5% 5

June 16, 2005 32.20% 6 3.33% 4.10% 0.00% 13.66% 4.24% 5

September 13, 2005 31.95% 6 3.33% 3.75% 0.00% 13.66% 4.24% 5

January 10, 2006 31.64% 6 3.33% 3.03% 1.00% 13.66% 4.24% 5

January 17, 2007 29.42% 6 4.18% 2.81% 1.00% 17.47% 4.24% 5

January 17, 2007 29.42% 7 4.18% 2.81% 1.00% 17.47% 4.24% 5

April 24, 2007 28.23% 6 4.37% 2.79% 0.00% 17.47% 4.24% 5

April 24, 2007 28.23% 7 4.37% 2.79% 0.00% 17.47% 4.24% 5

The expected life of the options is based on historical data, and is not necessarily indicative of future exercises.

The expected volatility is based on the assumption that volatility calculated using regression analysis of daily returns over the fi ve-year period (the expected life of the options) prior to the date of grant, excluding the share price fl uctuations of September 2002, is an indicator of future trends.

The assumptions about the exercise behavior of grantees used in determining the fair value of the options are given below (these assumptions are also based on historical data, which may not be indicative of future exercise behavior):

Grantees resident in France for tax purposes:

50% of grantees exercise once the share price exceeds 20% of the exercise price,

50% of grantees exercise once the share price exceeds 40% of the exercise price;

••

•

Grantees not resident in France for tax purposes:




10% of grantees exercise once the share price exceeds 100% of the exercise price.

4.23.3 Initial charge and movements during fiscal 2007

The stock option expense recognized in the fi scal 2007 income statement was 13.1 million euro, compared with 7.8 million euro in fi scal 2006.

The table below provides the quantity, weighted average exercise price (WAP) and movements of stock options during fi scal 2007 and fi scal 2006.

••

•

•

•



August 31, 2007 August 31, 2006

Number WAP (EUR ) Number WAP (EUR )

Outstanding at the beginning of the period 5,760,190(1) 30.96 5,996,468(2) 29.79

Granted during the period 1,366,300 47.97 977,452 34.78

Forfeited during the period (158,560) 34.19 (292,091) 29.69

Exercised during the period (2,282,803)(3) 32.69 (780,810)(4) 24.00

Expired during the period (127,208) 47.00 (140,829) 48.42

Outstanding at the end of the period 4,557,919 34.64 5,760,190 30.96

Exercisable at the end of the period 1,818,750 28.81 3,007,080 33.99

(1) This balance includes 1,756,878 options not accounted for in accordance with IFRS 2 because either (i) they were granted before November 7, 2002 or (ii) they were granted after November 7, 2002 but vested prior to January 1, 2005.

(2) This balance includes 2,146,072 options not accounted for in accordance with IFRS 2 because either (i) they were granted before November 7, 2002 or (ii) they were granted after November 7, 2002 but vested prior to January 1, 2005.

(3) The weighted average share price at the exercise date of options exercised in the period was 52.3 euro.(4) The weighted average share price at the exercise date of options exercised in the period was 36.3 euro.

The weighted average residual life of options outstanding as of August 31, 2007 was 3.6 years (August 31, 2006: 3 years).

The weighted average fair value of options granted during the period was 14.75 euro (fi scal 2006: 8.86 euro).

The table below gives the exercise prices and exercise period for options outstanding as of August 31, 2007:

Date of grantStart date of

exercise periodExpiration date of

exercise period Exercise price

Number of options

outstanding as of August 31, 2007

January 2002 January 2006 January 2008 47.00 euros 304,075

October 2002 October 2006 October 2007 21.87 euros 935


June 2003 January 2004 January 2009 24.00 euros 3,000



June 2005 June 2006 June 2011 26.04 euros 20,000

September 2005 September 2006 September 2011 28.07 euros 10,000




April 2007 April 2008 April 2013 55.40 euros 1,600

April 2007 April 2008 April 2014 55.40 euros 20,000

TOTAL 4,557,919

4.23.4 Plans awarded following the acquisition of Sodexho Marriott Services

The Group committed to delivering 3,044,394 Sodexho Alliance shares to Sodexho, Inc. employees at an average price of 29.01 US dollars per share under stock option plans assumed in connection with the June 2001 acquisition of 53% of the capital of Sodexho Marriott Services, Inc. As of August 31, 2007, 472,178 of these shares were still deliverable.

As of August 31, 2007, all these options were exercisable until April 2011.

The other option plans are not recognized under IFRS 2 because they were granted prior to the effective date of IFRS 2 in November 2002 and because the rights under the plans vested prior to January 1, 2005.



The table below gives the quantity, weighted average exercise price (WAP) and movements of these stock options during fi scal 2007 and fi scal 2006.

August 31, 2007 August 31, 2006

Number WAP (USD) Number WAP (USD)

Outstanding at the beginning of the period 854,391 28.53 1,565,122 28.95

Granted during the period

Forfeited during the period (16,722) 29.93 (2,094) 23.59

Exercised during the period (365,491)(1) 29.49 (708,637)(2) 29.47

Expired during the period 0

Outstanding at the end of the period 472,178 27.74 854,391 28.53

Exercisable at the end of the period 472,178 27.74 854,391 28.53

(1) The weighted average share price at the exercise date of options exercised in the period was USD 67.77.(2) The weighted average share price at the exercise date of options exercised in the period was USD 43.84.

The table below gives the exercise price of options outstanding as of August 31, 2007:

Date of grant Exercise price (USD)Number of options outstanding

as of August 31, 2007

November 6, 1997 30.01 26,199

June 8, 1998 38.82 86,424

September 22, 1998 37.81 1,671

February 8, 1999 31.95 2,096

November 22, 1999 22.34 211,760

July 19, 2000 23.01 354

December 15, 2000 28.16 137,000

January 5, 2001 27.57 2,966

April 2, 2001 39.71 3,708

TOTAL 472,718

4.24 Business combinations

4.24.1. Acquisitions made during Fiscal 2007Following is summarized information about Fiscal 2007 acquisitions:

Fiscal 2007 Country Acquisition datePercentage

acquiredAcquisition cost


OCDN U.S.A. October 30, 2006 100% 9.5

Gastro-Kanne Germany January 1, 2007 54% 5.4

Vivaboxes International Belgium June 11, 2007 100% 8.1

TOTAL FISCAL 2007 ACQUISITIONS* 23.0

* Including a 2 million euro payment deferred after closing date.

The impact of the acquisitions on the Group’s balance sheet as of August 31, 2007 is summarized as follows:

(in millions of euro) August 31, 2007

Goodwill 21.4

Intangible assets 5.1

Share of net assets acquired (0.2)

Deferred tax liabilities (1.5)

Minority interests (1.8)

TOTAL FISCAL 2007 ACQUISITIONS 23.0



As the Group is committed to acquire 100% of Gastro-Kanne prior to the end of 2009, additional goodwill of 4.3 million euro (not included in the above table) was recognized as of August 31, 2007 in conformity with the principles described in note 2.12.3.

4.24.2. Acquisitions made during Fiscal 2006

Fiscal 2006 Country Acquisition datePercentage

acquiredAcquisition

cost

Ticket Total Argentina June 14, 2006 100% 14.3

Le Lido France February 13, 2006 55.45% 13.7

TOTAL FISCAL 2006 ACQUISITIONS 28.0

The impact of the acquisition of these two entities pursuant to the fi nalization of the purchase price allocation was as follows:


August 31, 2007 Final August 31, 2006

Goodwill 28.5 27.8

Intangible assets 3.1

Share of net assets acquired (0.7) 0.3

Deferred tax liabilities (3.4)

Minority interests 0.5

TOTAL FISCAL 2006 ACQUISITIONS 28.0 28.1

Pursuant to a capital increase on August 27, 2007 the Group’s ownership in the Lido increased from 55.45% to 63.55%, resulting in additional goodwill of 1.8 million euro.

4.25 Commitments and contingencies

4.25.1 SuretiesCommitments arising from surety arrangements (pledges, charges secured against plant and equipment, and real estate mortgages) contracted by Sodexho Alliance and its subsidiaries in connection with operating activities during fi scal 2007 are immaterial.

4.25.2 Operating lease commitmentsOutstanding commitments over the residual term of operating leases as of August 31, 2007 were as follows:

Less than 1 year: 116 million euro

1 to 3 years: 151 million euro

3 to 5 years: 77 million euro

More than 5 years: 112 million euro.

These commitments arise under a large number of contracts worldwide, the terms of which are negotiated locally. They relate primarily to:

site equipment, office equipment and vehicles for 126 million euro;

the rent for offi ce premises of 318 million euro. The new 12-year leases signed on October 19, 2006 in connection with the relocation of the corporate headquarters to Issy-les-Moulineaux in 2008 increased operating lease commitments for offi ce premises by 53.8 million euro. The leases and lease renewals signed by Sodexho France and Sodexho Inc. for their offi ce premises represent operating lease commitments of 42 million euro and 32 million euro respectively.

•

•



4.25.3 Other commitments given


August 31, 2007August 31,

2006August 31,

2005

Less than 1 year

1 to 3 years

3 to 5 years

More than 5 years Total Total Total

Financial guarantees to third parties 99 11 0 6 116 129 160

Site management commitments 19 20 18 3 60 34 27

Performance bonds given to clients 13 0 0 120 133 92 16

Other commitments 2 2 0 1 5 26 7

TOTAL 133 33 18 130 314 281 210

Financial guarantees to third parties mainly comprise bank guarantees given by Sodexho Inc. totaling 83.2 million euro, and subordinated debt commitments under public private partnership (PPP) contracts (see note 2.3.2.) totaling 29.8 million euro.

The increase in site management commitments relates to guarantees given by the Group on signature of the Eiffel Tower foodservice contract.

Performance bonds given to clients are subject to regular review by the management at operating entity level. A provision is recorded as soon as payment under a performance bond becomes probable.

The increase in these performance bonds during the period refl ects the growing number of PPP contracts primarily signed in the United Kingdom.

Sodexho also has performance obligations to clients, but regards these as having the essential features of a performance bond rather than an insurance contract designed to compensate the client in the event of non-fulfi llment of the service obligation (compensation is generally due only where Sodexho is unable to provide alternative or additional resources to fulfi ll the obligation to the client).

In practice, given its size and geographical reach, Sodexho considers itself capable of providing the additional resources needed to avoid paying compensation to clients protected by such clauses.

As of August 31, 2007, no provision was recorded in the balance sheet with respect to these guarantees.

The reduction in other commitments is due mainly to the extinguishment of a bank guarantee given to the Brazilian courts in connection with the Banco Santos litigation (see note 4.28.).

Sodexho has commitments to provide training hours to its employees in France, known as Individual Training Rights. In the absence of guidance from regulatory authorities on the accounting treatment for these rights, the Group has opted to present these rights as a commitment. Based on available information, the number of hours to be provided to employees of French subsidiaries is estimated to be approximately 1,264,000.

4.26 Related parties

4.26.1 Compensation, loans, post-employment benefits and other employee benefits granted to Board members, to the Executive Committee, and to the CEO of Sodexho Alliance

(in euro) Fiscal 2007

Short-term employee benefi ts 12,624,109

Post-employment benefi ts 331,088

Stock option expenses 5,301,098

TOTAL 18,256,295

These benefi ts include directors’ fees, and all forms of compensation and benefi ts paid (or earned during the period for offi ces held) by Bellon SA, Sodexho Alliance and/or other Sodexho Group companies.

4.26.2 Related companies

SubsidiariesSodexho Alliance received fees totaling 94 million euro from its subsidiaries during fi scal 2007 for management and co-ordination services.



Other companiesTransactions with other related companies comprise loans advanced, commercial transactions, and off balance sheet commitments involving associates and non-consolidated companies.

Loans

Gross value as of August

31, 2007

Impairment as of August

31, 2007

Carrying amount


Carrying amount


Carrying amount


Associates 44 0 44 25 21

Non-consolidated companies 1 1 2 0 1

Off balance sheet commitments August 31, 2007 August 31, 2006 August 31, 2005

Commitments to third parties

Associates 30 34 32

Non-consolidated companies 0 0 0

Performance bonds given to clients

Associates 90 53 13

Non-consolidated companies 0 0 0

Revenues generated Fiscal 2007 Fiscal 2006

Associates 261 116

Non-consolidated companies 0 2

Operating expenses recognized Fiscal 2007 Fiscal 2006

Associates 1 1


Net fi nancing costs Fiscal 2007 Fiscal 2006

Associates 3 0


Principal shareholderAs of August 31, 2007, Bellon SA held 36.83% of the capital of Sodexho Alliance.

During fi scal 2007, Bellon SA invoiced Sodexho Alliance a total of 8.1 million euro for assistance and advisory services under a contract between the two companies.

During the fi rst half of fi scal 2007, the Annual Shareholders’ Meeting of Sodexho Alliance approved the payment of a dividend of 0.95 euro per share. Consequently, Bellon SA received a dividend payment of 55.6 million euro in February 2007.



4.27 Group employeesAs of August 31, 2007, Group employees comprised:

August 31, 2007

Executives, middle management, site managers & supervisory staff 44,619

Front-line service staff and other employees 297,761

TOTAL 342,380

Group employees by activity and region were as follows:


Total FFMS

Service Vouchers

and CardsHolding

Companies TotalFFMS North

America

FFMS Continental

Europe

FFMS United Kingdom and

IrelandFFMS Rest

of the world

TOTAL 119,242 89,013 42,908 87,527 338,690 3,348 342 342,380

4.28 Litigation

McReynolds v. Sodexho Marriott Services, Inc.In 2005, Sodexho, Inc. agreed to pay a maximum of 80 million US dollars to settle a class action lawsuit brought in the United States in order to avoid protracted legal proceedings and without admitting any liability. As of August 31, 2007, all amounts had been paid to the class members and their lawyers.

Sodexho Pass do BrazilSodexho Pass do Brazil was involved in a dispute with Banco Santos and a mutual fund concerning the existence of certain bank balances. In order to avoid protracted legal proceedings, Sodexho Pass do Brazil and the mutual fund reached a settlement in June 2007 covering the bulk of these balances.

Sodexho does not believe that the outstanding proceedings with Banco Santos will have a material effect on the Group’s fi nancial position.

Other litigationSodexho is involved in other litigation arising from its ordinary activities. The Group does not believe that liabilities relating to such litigation will in aggregate be material to its activities or to its consolidated fi nancial position.

4.29 Events subsequent to the balance sheet

On September 14, 2007, Sodexho signed an agreement to acquire the Service Vouchers and Cards business of the VR Group, the third largest issuer of service vouchers and cards in Brazil. This acquisition will extend Sodexho’s presence in the “Food Pass” and “Restaurant Pass” segments, and enable the Group to offer two new services: transport and vehicle fl eet maintenance. It will also open new development opportunities for Sodexho Service Vouchers and Cards in the Brazilian market.

On October 2, 2007, Sodexho completed the acquisition of 100% of Tir Groupé, a French market leader in the corporate and public sector market, for a price of 142.8 million euro. The acquired business represents an issue volume of around 300 million euro, and will be consolidated over approximately 11 months in fi scal 2008. Fair value remeasurement of the acquiree’s assets and liabilities is in progress.

On October 31, 2007, Sodexho completed the acquisition of 100% of Circles, a North American market leader in consumer and employee loyalty programs. Circles offers innovative and effective solutions in Concierge Services, Motivation, Loyalty and Rewards. The acquisition enhances Sodexho’s expertise in Quality of Life services, and will generate signifi cant synergies across all of Sodexho’s client segments in North America.



5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY

5.1 Exposure to foreign exchange and interest rate risk

Because Sodexho has operations in 80 countries, all components of the fi nancial statements are inevitably infl uenced by foreign currency translation effects, and in particular by fl uctuations in the US dollar. However, exchange rate fl uctuations do not generate any operational risk, because each of the Group’s subsidiaries bills its revenues and incurs its expenses in the same currency.

Sodexho Alliance uses derivative instruments to manage the Group’s exposure to interest rate and foreign exchange rate risk.

The Board of Directors, the Chief Executive Offi cer and the Chief Financial Offi cer have approved policies designed to prevent speculative positions. Under these policies:

substantially all borrowings must be at fi xed rates of interest, or converted to fi xed-rate using hedging instruments;

foreign exchange risk on loans to subsidiaries must be hedged;

counterparty risk must be managed and spread. Transactions may only be contracted with counterparties that have an AFB master agreement or equivalent (ISDA) in place with the Group company involved;

the maturity of hedging instruments must not exceed the maturity of the borrowings they hedge.

•

•

•

•

Analysis of sensitivity to interest rates

(in millions of euro) NoteLess than

1 year 1 to 5 years Over 5 years

Financial liabilities (including derivatives) 111 1,325 514

Cash and cash equivalents 1 1,831

Net renewable position 2 (1,720) 1,325 514

Net position renewable within less than 1 year (1,720)

Increase of 1% in short-term interest rate 3 1%

Average term 1 year

Cumulative effect of 1% increase in short-term interest rate 4 (17)

Net interest expense paid during Fiscal 2007 89

Cumulative effect as % of net interest expense for Fiscal 2007 (19)%

(1) As some of the Group’s cash and cash equivalents are generated by the Service Vouchers and Cards activity, part of the effect of changes in interest rates would impact operating profit rather than net financing costs.

(2) A negative amount indicates a net asset.(3) This 1% increase has been assumed to have an identical effect across all currencies used by Sodexho for financing.(4) A negative amount indicates income.



Estimate of risk of loss on the net foreign currency position in the event of a uniform unfavorable movement of 0.01 euro against all currencies listed

USD GBP Other foreign currencies

Closing rate 0.73185 1.472971

Monetary assets

Working capital items 135 157 778

Other receivables 5 1 25

Deferred tax assets 77 16 16

Cash and cash equivalents 125 170 581

TOTAL MONETARY ASSETS 342 344 1,400

Monetary liabilies

Financial liabilities 446 123 34

Working capital items 877 447 1,222

Other liabilities 0 31 36

Deferred tax liabilities 1 2 14

TOTAL MONETARY LIABILITIES 1,324 603 1,306

Net position (982) (259) 94

Impact of €0.01 movement in exchange rate (13) (2) immaterial

Analysis of sensitivity to exchange ratesA 10% movement in the US dollar against the euro would have an effect of:

543 million euro on full-year consolidated revenues;

26 million euro on full-year consolidated operating profi t;

11 million euro on full-year net profi t attributable to equity holders of the parent.

A 10% movement in sterling against the euro would have an effect of:

152 million euro on full-year consolidated revenues;

7 million euro on full-year consolidated operating profi t;

5 million euro on full-year net profi t attributable to equity holders of the parent;

••

•

••

•

5.2 Exposure to liquidity riskThe Group’s liquidity improved in fi scal 2007 due to the 12-month extension (to April 2012) of the credit facility contracted in April 2005 and to the 500 million euro bond issue carried out in March 2007 and maturing in March 2014. These two transactions extended the average maturity of the Group’s borrowings.



6. SCOPE OF CONSOLIDATION

% interest% voting

rightsPrincipal

activity Country

France

Société Francaise de Restauration (sub-group) FFMS France

Altys Multiservice FFMS France

Altys Gestion FFMS France

Société Française de Services FFMS France

Société Française de Restauration et Services (sub-group)

FFMS France

Sodequip FFMS France

Sodexho Prestige FFMS France

Lido SEGSMHI 63.5% 63.5% FFMS France

SIR FFMS France

CIR FFMS France

Comrest FFMS France

OL Restauration 70% 70% FFMS France

SIGES FFMS France

La Normande SA FFMS France

RGC FFMS France

Sagere FFMS France

Sogeres (sub-group) FFMS France

L’Affi che FFMS France

SFP FFMS France

Millénia 60% 60% FFMS France

N, EM Altima 40% 40% FFMS France

Bateaux Parisiens (sub-group) FFMS France

Armement Lebert Buisson FFMS France

Société des Thermes de Neyrac-les-Bains FFMS France

Emis FFMS France

Altys International FFMS France

Sodexho Chèques et Cartes de Services SVC France

Sodexho Pass International HOL France

N Vivaboxes France SVC France

Sodexho France HOL France

Universal Sodexho SAS HOL France

Sofi nsod HOL France

Etinbis HOL France

The table below lists the principal companies included in the consolidation as of August 31, 2007.

The fi rst column shows the percentage interest held by the Group, and the second column the percentage of voting rights held by the Group. Percentage interests and percentages of voting rights are only shown if less than 97%.

Companies newly consolidated during fi scal 2007 are indicated by the letter “N”.

Associates (companies accounted for by the equity method) are indicated by the letters “EM”. All other companies are fully consolidated.

The principal activity of each company is indicated by the following abbreviations:

FFMS: Food and Facilities Management Services;

SVC: Service Vouchers and Cards;

HOL: Holding Company.

•••



% interest% voting

rightsPrincipal

activity Country

France

Etin HOL France

Gardner Merchant Groupe HOL France

Loisirs Développement HOL France

Sodexho Altys HOL France

Holding Sogeres HOL France

Sodexho Amérique du Sud HOL France

Sodexho Management HOL France

Sodexho Europe continentale HOL France

Sodexho Asie Océanie HOL France

Sodexho Grande Chine HOL France

Sodexho IS & T HOL France

SIGES Guyane FFMS France

Société Hôtelière et de Tourisme de Guyane FFMS France

Sodex’Net FFMS France

Sodexho Guyane FFMS France

Société Guyanaise de Protection et Gardiennage FFMS France

% interest% voting

rightsPrincipal

activity Country

America

Sodexho, Inc. (sub-group) FFMS United States

Sodexho Canada (sub-group) FFMS Canada

N OCDN FFMS United States

Delta Catering Management 49% 49% FFMS United States

Universal Sodexho USA, Inc. HOL United States

Universal Sodexho Partnership FFMS United States

Universal Services Enterprises Llc HOL United States

Energy Catering Services Llc FFMS United States

Universal Sodexho Empresa de servicios y Campamentos

FFMS Venezuela

Universal Sodexho Services de Venezuela FFMS Venezuela

Universal Services do Brasil Ltda FFMS Brazil

Sodexho do Brasil Comercial Ltda FFMS Brazil

Sodexho Argentina FFMS Argentina

Sodexho Colombia 65% 65% FFMS Colombia

Sodexho Venezuela Alimentaciõn y Servicios 70% 70% FFMS Venezuela

Sodexho Costa Rica FFMS Costa Rica

Sodexho Mexico FFMS Mexico

EM Doyon Universal Services JV (sub-group) 50% 50% FFMS United States

Sodexho Perú FFMS Peru

EM BAS 33% 33% FFMS Chile

SIGES Chile FFMS Chile

Sodexho Chile (sub-group) FFMS Chile

Sodexho Servicios de Personal FFMS Mexico

N Vivaboxes U.S. SVC United States



% interest% voting

rightsPrincipal

activity Country

America

Sodexho Pass do Brazil SVC Brazil

Cardapio Informatica SVC Brazil

National Administracao de Restaurentes SVC Brazil

Sodexho Pass Chile SVC Chile

Sodexho Pass Venezuela 64% 64% SVC Venezuela

Sodexho Pass de Colombia 51% 51% SVC Colombia

Sodexho Pass Perú SVC Peru

Sodexho Pass de Panama 51% 51% SVC Panama

Sodexho Pass SA SVC Argentina

Ticket Total Uruguay SVC Uruguay

Prestaciones Mexicanas (sub-group) SVC Mexico

Sodexho Servicios Operativos SVC Mexico

% interest% voting

rightsPrincipal

activity Country

Africa

Universal Sodexho Afrique FFMS France

Universal Sodexho Nigeria FFMS Nigeria

Universal Sodexho Gabon 90% 90% FFMS Gabon

Sodexho Angola FFMS Angola

SABA FFMS Tunisia

Sodexho Bénin FFMS Benin

Sodexho Tchad FFMS Chad

Universal Sodexo Ghana 90% 90% FFMS Ghana

Sodexho Pass Tunisie 77% 77% SVC Tunisia

Sodexho Maroc FFMS Morocco

Universal Sodexho Guinea Ecuatorial 70% 70% FFMS Eq. Guinea

Universal Sodexho Cameroun 70% 70% FFMS Cameroon

Universal Sodexho Congo FFMS Congo

Sodexho Southern Africa (sub-group) 55% 55% FFMS South Africa

Sodexho Investments Ltd HOL South Africa

Wadi Ezzain 75% 75% FFMS Libya

Universal Sodexho Madagascar FFMS Madagascar

Sodexho Tanzania FFMS Tanzania

% interest% voting

rightsPrincipal

activity Country

Europe

Sodexho Belgique (sub-group) FFMS Belgium

Altys Belgique FFMS Belgium

Imagor Services & Cie Snc SVC Belgium

Groupe Cheque-List Groep SVC Belgium

Imagor RSC SVC Belgium

Special Event SVC Belgium



% interest% voting

rightsPrincipal

activity Country

Europe

N Vivaboxes International SVC Belgium

Sodexho Suisse FFMS Switzerland

Altys Suisse FFMS Switzerland

Altys Deutschland FFMS Germany

Altys Austria FFMS Austria

Altys République Tchèque FFMS Czech Republic

Sodexho Luxembourg (sub-group) FFMS Luxembourg

Sodexho Italia (sub-group) FFMS Italy

Sodexho Doo FFMS Slovenia

Sodexho Oy FFMS Finland

Abra Nordic Vending Oy FFMS Finland

EM Arandur Oy 33% 33% FFMS Finland

Sodexho Scandinavian Holding (sub-group) FFMS Sweden

Sodexho España (sub-group) FFMS Spain

Altys Multiservicios 79% 79% FFMS Spain

Sodexho Portugal II Restauracao e Servicos FFMS Portugal

Sodexho Catering & Services GmbH (sub-group) FFMS Germany

Sodexho Scs GmbH (sub-group) FFMS Germany

Barenmenu FFMS Germany

Sodab FFMS Germany

Känne Catering-Service GmbH FFMS Germany

N Gastro-Kanne 54% 54% FFMS Germany

Sodexho Ao FFMS Russia

Sodexho Euroasia FFMS Russia

Sodexho Pass CIS SVC Russia

Sodexho Spolecne Stravovani a Sluzby FFMS Czech Republic

Sodexho - Skolni Jidelny FFMS Czech Republic

Sodexho Spolocne Stravovanie a Sluzby FFMS Slovakia

Sodexho Magyarorszag KTT FFMS Hungary

Zona Vendeglato FFMS Hungary

Sodexho Toplu Yemek FFMS Turkey

Sodexho Polska FFMS Poland

Sodexho Catering & Services GmbH FFMS Austria

EM Agecroft Prison Management Ltd 50% 50% FFMS United Kingdom

Sodexho Services Group HOL United Kingdom

EM HpC King’s College Hospital (Holdings) Ltd 25% 25% FFMS United Kingdom

Sodexho Ltd FFMS United Kingdom

Sodexho Prestige Ltd (sub-group) FFMS United Kingdom

Universal Sodexho Scotland FFMS United Kingdom

Harmondsworth Detention Services 51% 51% FFMS United Kingdom

Kalyx FFMS United Kingdom

EM Catalyst Healthcare (Romford) Holdings Ltd 25% 25% FFMS United Kingdom

EM Catalyst Healthcare (Roehampton) Holdings Ltd 25% 25% FFMS United Kingdom

Tillery Valley Foods FFMS United Kingdom

Rugby Hospitality 2003 55% 55% FFMS United Kingdom



% interest% voting

rightsPrincipal

activity Country

Europe

Sodexho Defence Services FFMS United Kingdom

Sodexho Land Technology FFMS United Kingdom

Sodexho Investment Services FFMS United Kingdom

EM Peterborough Prison Management Holdings Ltd 33% 33% FFMS United Kingdom

EM Ashford Prison Services Holdings Ltd 33% 33% FFMS United Kingdom

Sodexho Holdings HOL United Kingdom

Sodexho Education Services FFMS United Kingdom

Sodexho Management Services (sub-group) FFMS United Kingdom

Sodexho Healthcare Services FFMS United Kingdom

Sodexho Support Services HOL United Kingdom

Universal Sodexho Holdings HOL United Kingdom

EM Catalyst Healthcare (Manchester) Holdings Ltd 25% 25% FFMS United Kingdom

Universal Services Europe HOL United Kingdom

Primary Management Aldershot 60% 60% FFMS United Kingdom

EM Mercia Healthcare (Holdings) Ltd 25% 25% FFMS United Kingdom

EM South Manchester Healthcare (Holdings) Ltd 25% 25% FFMS United Kingdom

Rugby Travel & Hospitality’07 80% 80% FFMS United Kingdom

EM RMPA Holdings Ltd 14% 14% FFMS United Kingdom

EM Pinnacle Schools (Fife) Holdings Ltd 10% 10% FFMS United Kingdom

EM Enterprise Civic Buildings (Holdings) Ltd 10% 10% FFMS United Kingdom

EM Enterprise Education Holdings Conwy Ltd 10% 10% FFMS United Kingdom

EM Enterprise Healthcare Holdings Ltd 10% 10% FFMS United Kingdom

EM ES 2005 Ltd 50% 50% FFMS United Kingdom

EM Addiewell Prison (Holdings) Ltd 33% 33% FFMS United Kingdom

N, EM Healthcare support (North Staffs) Holding Ltd 25% 25% FFMS United Kingdom

N Vivaboxes UK SVC United Kingdom

Sodexho Ireland Ltd FFMS Ireland

Universal Sodexho Norway FFMS Norway

Universal Sodexho The Netherlands FFMS Netherlands

Universal Sodexho Kazakhstan Ltd FFMS Denmark

Universal Services Europe FFMS Iceland

Sodexho Nederland BV (sub-group) FFMS Netherlands

N Sodexho Altys BV FFMS Netherlands

Sodexho Pass Luxembourg SVC Luxembourg

Sodexho Pass Belgique (sub-group) SVC Belgium

Sodexho Pass GmbH SVC Germany

Sodexho Pass SRL (sub-group) SVC Italy

N Vivaboxes Italie SVC Italy

Sodexho Pass Espana SVC Spain

Ticket Menu SVC Spain

Sodexho Pass Austria SVC Austria

Sodexho Pass Limited SVC United Kingdom

Sodexho Pass Hungaria SVC Hungary

Sodexho Pass Bulgaria SVC Bulgaria

Sodexho Pass Ceska Republika SVC Czech Republic



% interest% voting

rightsPrincipal

activity Country

Europe

Sodexho Pass Slovak Republic SVC Slovakia

Vouchers Acquisition Corporate Holding BV SVC Netherlands

Sodexho Pass Polska SVC Poland

Sodexho Restoran Servisleri 90% 90% SVC Turkey

Network Servizleri 45% 50% SVC Turkey

Sodexho Pass Romania SVC Romania

Bluticket Romania SVC Romania

Catamaran Cruisers FFMS United Kingdom

Compagnie Financière Aurore Internationale HOL Belgium

% interest% voting

rightsPrincipal

activity Country

Asia, Australasia, Middle East

Kelvin Catering Services 49% 49% FFMS United Arab Emirates

Teyseer Services Company 49% 49% FFMS Qatar

Restauration Française (Nouvelle-Calédonie) 60% 60% FFMS France

Sodexho Nouvelle-Calédonie 54% 54% FFMS France

Socanord 60% FFMS France

SRRS (La Réunion) FFMS France

Sodexho Polynésie FFMS France

Sodexho Singapore FFMS Singapore

Sodexho Malaysia FFMS Malaysia

Sodexho Hong Kong FFMS Hong Kong

EM Sodexho Healthcare Support Services (Thailand)

26% 26% FFMS Thailand

Sodexho Korea FFMS Korea

Universal Sodexho Eurasia FFMS United Kingdom

AIMS Corporation FFMS Australia

Sodexho Australia (fm) Pty Ltd FFMS Australia

Sodexho Retail Services Pty Ltd FFMS Australia

Universal Remote Site Services (sub-group) FFMS Singapore

PT Universal Ogden Indonesia 90% FFMS Indonesia

Altys Multi-Service Pty FFMS Australia

Sodexho Australia (sub-group) FFMS Australia

EM Serco Sodexho Defence Services 50% 50% FFMS Australia

Sodexho Venues Australia FFMS Australia

Sodexho Total Support Services NZ FFMS New Zealand

Universal Sodexho Pty Ltd FFMS Australia

Sodexho Tianjin Service Management Company Ltd

FFMS China

Sodexho Shanghaï Management Services FFMS China

Sodexho Services Company Ltd Shanghaï FFMS Chine

EM Shanghaï SAIC Sodexho Services 49% 49% FFMS China



% interest% voting

rightsPrincipal

activity Country

Asia, Australasia, Middle East

Beijing Sodexho Service Company Ltd 95% 95% FFMS China

Sodexho (Guangzhou) Management Services Ltd

FFMS China

Wuhan Innovation Sodexho Services 70% 70% FFMS China

Sodexho Pass Shanghai SVC China

Sodexho Support Services (Thailand) Ltd 61% 74% FFMS Thailand

Sodexho Thailand Ltd 49% 49% FFMS Thailand

Sodexho India FFMS India

Sodexho Pass Services India SVC, FFMS India

Sodexho Pass, Inc. 60% 60% SVC Philippines

Sodexho Services Lebanon 60% 60% FFMS Lebanon

Universal Sodexho Laos FFMS Laos

Sodexho Pass Indonésie 95% 95% SVC Indonesia

Mongolian Catering 70% 70% FFMS Mongolia

SISA UAE FFMS United Arab Emirates

Sakhalin Support Services 95% 95% FFMS Russia

Allied Support FFMS Russia



STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended 31 August 2007SODEXHO ALLIANCE S.A. 3, avenue Newton78180 Montigny-le-Bretonneux

D


In compliance with the assignment entrusted to us by your General Meeting, we have audited the accompanying consolidated fi nancial statements of Sodexho Alliance S.A. for the year ended 31 August 2007.

The consolidated fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit.

I - Opinion on the consolidated fi nancial statements

We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the management, as well as evaluating the overall fi nancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities, of the fi nancial position of the consolidated group of companies in accordance with IFRS as adopted by the EU.

II - Justifi cation of our assessmentsIn accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters:

The Company tests goodwill for impairment, and assesses whether assets with a finite useful life present an indication of impairment, in accordance with the methods set out in notes 2.8 and 4.10 to the consolidated fi nancial statements.

•

We have reviewed the methods used for the aforementioned test, as well as the methodology applied to assess value in use based on the present value of future cash fl ows, after tax. We have also reviewed the related documentation which was prepared, and assessed the consistency of the data which was used, in particular the assumptions used in the preparation of the business plans.

With regard to provisions for risks and litigation, our assessment was based on the facts available at the date of this report and as disclosed in notes 2.16 and 4.19 to the consolidated fi nancial statements.

The provisions for pension and other post-employment benefi ts as described in notes 2.17 and 4.18 to the consolidated fi nancial statements have chiefl y been assessed by independent actuaries. We have reviewed the data and assumptions used by these actuaries as well as their conclusions, and have verifi ed that note 4.18 provides appropriate information. We also assessed whether these estimates were reasonable.

The aforementioned items are based on estimates and underlying assumptions. As stated in note 2.2 to the consolidated fi nancial statements, actual results may differ materially from such estimates in different conditions.

These assessments were made in the context of our audit of the consolidated fi nancial statements, taken as a whole, and therefore contributed to the formation of the unqualifi ed opinion expressed in the fi rst part of this report.

III - Specifi c verifi cation In accordance with professional standards applicable in France, we have also verifi ed the information given in the group’s management report. We have no matters to report as to its fair presentation and its consistency with the consolidated fi nancial statements.

•

•

Neuilly-sur-Seine and Paris La Défense, November 16, 2007The Statutory Auditors

PricewaterhouseCoopers Audit KPMG AuditDépartement de KPMG SA


This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. The statutory auditors’ report includes information specifi cally required by French law in all audit reports, whether qualifi ed or not, and this is presented below the opinion on the fi nancial statements. This information includes an explanatory paragraph discussing the auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the fi nancial statements.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.



SUPPLEMENTAL INFORMATION ON THE CONSOLIDATED FINANCIAL STATEMENTS

Financial Ratios

Fiscal 2007 Fiscal 2006

Financial independence

Non-current debt

0.8 0.9Shareholders’ equity and minority interests

Debt coverage (in years)

Debt*

3.4 4.2Cash from operations**

Return on equity

Profi t attributable to equity holders of the parent

18.0 % 17.8 %Equity attributable to equity holders of the parent (before profi t for the period)

Interest cover

Operating profi t

7.2 6.3Net interest expense

* Debt = non-current debt + current debt (excluding overdrafts) - financial instruments recognized as assets.** Cash from operations = Net cash provided by operating activities - changes in working capital.

D

Average and closing exchange rates for fi scal 2007

ISO code Country Currency

Closing rate at August 31, 2006

1 euro =

Average rate for fi scal 2007

1 euro =

CFA Africa CFA Franc (thousands) 0.655957 0.655957

DZD Algeria Dinar (thousands) 0.093558 0.093677

ARS Argentina Peso 4.328900 4.095843

AUD Australia Dollar 1.655200 1.650922

BRL Brazil Real 2.661300 2.719045

BGN Bulgaria Lev 1.955800 1.955800

CAD Canada Dollar 1.442100 1.478356

CLP Chile Peso (thousands) 0.716400 0.703635

CNY China Yuan 10.325200 10.241582

COP Colombia Peso (thousands) 2.706440 2.859151

CRC Costa rica Colon (thousands) 0.708370 0.685460

CZK Czech Republic Koruna (thousands) 0.027716 0.028133

DKK Denmark Krone 7.444200 7.451246

GHC Ghana Cedi (thousands) 1.274800 5.860747

HKD Hong Kong Dollar 10.658400 10.312614

HUF Hungary Forint (thousands) 0.257420 0.254835

ISK Iceland Krona 87.200000 87.322869

INR India Rupee (thousands) 0.056020 0.057104

IDR Indonesia Rupiah (thousands) 12.837330 12.035828

JPY Japan Yen (thousands) 0.157550 0.157381

KZT Kazakhstan Tenge (thousands) 0.170670 0.164875

KRW Korea Won (thousands) 1.284280 1.236584

LBP Lebanon Pound (thousands) 2.059850 1.991508

MGA Madagascar Ariary (thousands) 2.506220 2.598791

MYR Malaysia Ringgit 4.774200 4.655250



ISO code Country Currency

Closing rate at August 31, 2006

1 euro =

Average rate for fi scal 2007

1 euro =

MXN Mexico Peso 15.075700 14.449487

MNT Mongolia Tugrik (thousands) 1.607660 1.540476

MAD Morocco Dirham 11.210500 11.147981

NZD New Zealand Dollar 1.919700 1.868491

NGN Nigeria Naira (thousands) 0.172560 0.169035

NOK Norway Krone 7.947500 8.127717

OMR Oman Rial 0.525200 0.508466

PAB Panama Balboa 1.365800 1.321918

PEN Peru New Sol 4.320000 4.221967

PHP Philippines Peso 63.845000 63.682575

XPF Polynesia CPC Franc 119.331700 119.331700

PLN Poland Zloty 3.832000 3.852027

QAR Qatar Rial 4.971500 4.810764

RON Romania Leu 3.247500 3.354819

RUB Russia Rouble (thousands) 0.035086 0.034602

SAR Saudi Arabia Riyal 5.122600 4.957409

SGD Singapore Dollar 2.079600 2.032047

SKK Slovakia Koruna (thousands) 0.033754 0.034697

SIT Slovenia Euro zone since Jan 1, 2007 0.239640 0.239637

ZAR South Africa Rand 9.899300 9.554458

SEK Sweden Krona 9.372100 9.205606

CHF Switzerland Swiss Franc 1.636600 1.619723

TZS Tanzania Schilling (thousands) 1.755260 1.685962

THB Thailand Baht 44.652000 44.930179

TND Tunisia Dinar 1.738300 1.719806

TRY Turkey New Lira 1.812800 1.840461

AED United Arab Emirates Dirham 5.015900 4.854737

GBP United Kingdom Pound 0.678900 0.674619

USD United States Dollar 1.366400 1.321941

UYU Uruguay Peso 32.267000 31.773836

VEB Venezuela Bolivar (thousands) 2.930310 2.842027



Two-Year Financial Summary

(in millions of euro) Fiscal 2007 Fiscal 2006

Total shareholders’ equity 2,300 2,146

Equity attributable to equity holders of the parent 2,277 2,129

Equity attributable to minority interests 23 17

Debt(1)

Non-current debt 1,839 1,852

Current debt 111 28

Cash and equivalents, net of bank overdrafts 1,377 1,006

Restricted cash and fi nancial assets of the Service Vouchers & Cards activity 454 423

Net debt(2) (119) (451)

Revenues 13,385 12,798

Operating profi t 640 605

Profi t for the period 363 333

Profi t attributable to minority interests 16 10

Profi t attributable to equity holders of the parent 347 323

Average number of shares outstanding 156,113,136 156,050,771

Earnings per share (in euro) 2.22 2.07

Dividend per shares (in euro) 0.95 0.95

Share price at August 31 (in euro) 48.38 41.61

Highest share price in the fi scal year (in euro) 59.71 42.09

Lowest share price in the fi scal year (in euro) 40.61 28.00

(1) Including financial instruments, excluding bank overdrafts.(2) Cash & cash equivalents + restricted cash and financial assets of the Service Vouchers & Cards activity – debt.

Investment Policy

(in millions of euro) Fiscal 2007 Fiscal 2006

Acquisitions of property, plant and equipment and intangible assets, plus client investments 240 207

Acquisitions of equity interests 23 51

Employee profi t-sharing

Fiscal 2007 12

Fiscal 2006 12

Fiscal 2005 12

Fiscal 2004 12

Fiscal 2003 8


Consolidated Information 4.Employment and Environmental Information

Employment and Environmental Information1. EMPLOYMENT INFORMATION

Social information pertaining to Sodexho’s worldwide operations, in particular in France, is provided below. Further information is available in the Sustainable Development Report and the Human Resources Report found on the Sodexho website www.sodexho.com.

As of August 31, 2007 for France and as of July 31, 2007 for the other countries.

Non-managerial Managerial Total

297,761 44,619 342,380

The number of Group employees increased by 10,284 during Fiscal 2007.

1.1.2 Recruitment by grade2

Number of recruits by category


149,925 10,960 160,885

28,656 additional permanent contracts were added as compared to Fiscal 2006.

Percentage of recruits on permanent contract (excluding staff assumed from other service-providers) relative to average workforce


50.9% 24.6% 47.4%

1.1.3 Employee training by grade2

Number of employees who have undergone training


177,543 37,531 215,074

17,274 additional employees were trained as compared to Fiscal 2006.

Percentage of average workforce who have undergone training


60.2% 84.2% 63.4%

Number of training hours2

2,543,309 hours, 89,401 hours more than Fiscal 2006.

2 Scope = 100% of Group employees as of the end of Fiscal 2007.

1.1 Worldwide

1.1.1 Group workforce as of the end of Fiscal 20071

1 Scope = 100% of Group employees as of the end of Fiscal 2007, August 31, 2007 for France and July 31, 2007 for other countries.


4. Consolidated InformationEmployment and Environmental Information

1.1.4 Internal promotion1

During Fiscal 2007, the Group made 2,845 internal promotions comprising 2,470 promotions to site manager grade and 375 to manager grade. The total number of promotions increased by 646 from Fiscal 2006. These fi gures do not include internal promotions in the same category.

Internal promotions from one grade to another Site manager Manager

Internal promotions (Internal promotions and external recruitment) 19.8% 28.2%

The total number of promotions increased by 646 from Fiscal 2006.

1.1.5 Work-related accidents by grade1

Number of work-related accidents


8,500 461 8,961

Percentage of work-related accidents relative to average workforce


3.0% 1.1% 2.7%

The number of accidents by person slightly increased from the prior year (0.2%).

1.1.6 Engagement Survey for EmployeesEngagement surveys for employees are an essential tool to help the Group understand the needs of our employees and to attract, develop, motivate and retain the best talents for the Group. Sodexho has, for several years, launched satisfaction surveys with its employee teams and sought to measure their engagement level, i.e., employee satisfaction and motivation to stay with the Group and most importantly their engagement to be a part of the Group’s progress.

An engaged employee is defined as one who speaks positively of the Group, wants to remain an employee and is ready to invest him or herself in the Group’s success. The rate of engagement is the percentage of employees who fi t within this description.

The first engagement survey was carried out during Fiscal 2006 on a global basis, in 35 countries covering 87% of the Group’s employees. The global rate of engagement for Sodexho was 50%.

Hewitt Consultants, Sodexho’s partner for this survey, has performed these types of engagements using the same methodologies for other global companies who are convinced of the importance of human resources and who wish to measure their employees’ engagement levels in order to improve Sodexho’s engagement rate ranks in the median compared to other global companies according to Hewitt Consultants.

Sodexho’s objective it to reach an engagement rate in excess of 60%, or similar to the rate of those companies who are judged in this category to be the best in class.

As the survey is scheduled to be conducted every two years, the next engagement survey will be carried out during Fiscal 2008.

1.1.7 Employee Retention RateEmployee retention rate has been one of the Group’s key performance indicators for the past 7 years. During this period, the retention rate for all employees has progressed from 49% to 64.2% and the retention rate for Site Managers progressed from 81% to 87.2%.

In order to increase the retention of our employees, the following action plans are being implemented:

organization of structured orientation programs;

recognition programs;

reinforced internal communication;

meetings between Business Unit CEOs and site managers, including middle managers,

monthly update letters from the Business Unit CEOs to site managers;

periodic reviews and analyses of employee retention rates;

better appreciation for the reasons employees leave the Group through; exit interviews.

•••

•

•

•

•

1 Scope = 97% of Group employees as of the end of Fiscal 2007.



1.2 FranceThe following information relates to all Sodexho’s operations in France, including Food and Facilities Management services, Service Vouchers and Cards, Group holding companies and Sodexho Alliance.

1.2.1 WorkforceAt August 31, 2007, the total workforce of Sodexho in France was 34,588, representing 1,072 new employees in one year.

Workforce by job category

Workforce by job category and gender

57% of the workforce is female. By grade, females account for 64% of front-line staff, 25% of supervisory staff and 29% of managerial staff.

Workforce by age group

The average age is 40.5 years, representing 0.9 years more than as of August 31, 2006.

Workforce by age group and job category

1.2.2 Employment5,012 staff were recruited on permanent contract during Fiscal 2007, comprising 3,230 by direct recruitment, 745 by conversion of fi xed-term contracts into permanent contracts, and 1,037 by taking over staff from other service-providers.

Staff recruited on permanent contract

Taking over staff from other service-providers is inherent to our business. As a result of applicable regulations and laws, a change of service-provider involves transferring the contracts of employment of staff at the sites managed.

Due to the Group’s image, Sodexho does not face particular diffi culties in recruiting managers for our Foodservices activity, either by receiving unsolicited resumes or through recruitments. However, the Group experiences slightly more diffi culties in recruiting supervisors in the Facilities management activities as these services are newer in the market and are not well-known yet by students. In addition, the Group experiences some diffi culties in recruiting supervisors and chefs as individuals with these qualifi cations are harder to fi nd in the market. Promotion policies (such as certifi ed training, deputy site management programs) and apprenticeships allow Sodexho to compensate for these diffi culties.

As at August 31, 2007, 13% of the workforce were on fi xed-term contract.



During Fiscal 2007, employment on fi xed-term contract accounted for only 15% of hours worked and temporary agency work for 2%. These are basically jobs designed to provide temporary replacements and to cope with spikes in workload.

207,359 hours of overtime were worked in Fiscal 2007, or 0.42% of hours worked.

Number of hours worked by type of contract

During Fiscal 2007, 850 employees had their contract of employment terminated. Of these, 6 were for economic reasons.

Due to the growth of our activities, we are rarely in a situation where we lay off employees. Nevertheless, as a result of productivity efforts and site closings we may need to lay off employees. In those situations, Sodexho has implemented several plans, based on the particular facts of each event, the competencies of our employees and the applicable laws:

internal opportunities;

relocation assistance and internal placements;

training for new positions;

personal support;

particular aid for seniors.

1.2.3 Internal promotionInternal promotion is a key feature of Sodexho human resources policy. In Fiscal 2007, 387 staff were promoted to a higher grade in France, with 314 staff promoted to supervisor and 73 supervisors becoming managers.

1.2.4 Organization of working hoursExcept for public restaurants, which account for less than 1.85% of the total workforce, the working week is 35 hours (34.87 hours for most subsidiaries).

•••••

Organization of working hours

1.2.5 AbsenteeismThe average absenteeism rate was 7.97% for the workforce as a whole, representing 0.35% less than Fiscal 2006. The three main reasons for absenteeism were sickness (52%), authorized paid leave and unpaid leave (26%), and work-related travel-to-work accidents (12%).

Days’ absence by reason

1.2.6 CompensationThe average annual salary for a full-time front-line employee was €19,068, representing 2.57% more than Fiscal 2007 and 26.7% higher than the legal minimum wage (average legal minimum wage between September 1, 2006 and August 31, 2007 for a workweek of 34.87 hours was 15,071 euro).

The average compensation of full-time female employees was:

81% of that of males (managers);

96% of that of males (supervisors);

89% of that of males (front-line managers).

The above grades each cover different kinds of work.

•••



Statutory and voluntary employee profi t-sharing (part IV of Book IV of the French Labor Code)Profit-sharing agreements operate within Sodexho’s French subsidiaries. The share of profi ts allocated to employees during Fiscal 2007 was 12,326,937 euro, representing 585,987 euro more than Fiscal 2006.

1.2.7 Social security charges1

In the year to August 31, 2007, social security charges accounted for 24.79% of the compensation of front-line staff. The employer’s contribution was 47.90%.

1.2.8 Collective agreements36 collective agreements were signed in Fiscal 2007, including two profi t-sharing agreements.

Sodexho’s French subsidiaries each organized annual pay negotiations with trade unions.

All employees of subsidiaries in France are covered by collective agreements.

1.2.9 Health and SafetyThe frequency rate* of work-related accidents was 57.63, and the severity rating* was 1.65.

The Health and Safety and Working Conditions Committee met 107 times in Fiscal 2007, versus 92 in the prior year.

As part of our general legal duty on health and safety:

all new recruits receive initial training familiarizing them with their work area, informing them of the risks to which they will be exposed, and telling them what action they should take in the event of an accident;

as a service-provider on premises usually owned by the client, Sodexho draws up an accident prevention plan jointly with the client, based on an assessment of the risks and potential interference between our activities;

we produce a single document, the “Work-related Risk Assessment”, which identifi es dangers, analyzes risks and indicates preventive action to be taken.

1.2.10 TrainingSodexho won the “Silver Award” at the fi rst “ Individual Right to Training Awards” presented in March 2007 by the Demos Group, one of the European leaders in training. The awards are given for the most successful integration of rights to individual training, widespread access to training and career development prospects. 2,000 Sodexho employees received training in 2006 and 4,000 in 2007.

•

•

•

Overall, 11,366 people received training, an increase of 15.3% over the prior year. As a result of changes in the organization and adaptation of training methods, Sodexho was able to increase the number of employees who participated in training. Total expenditure on training by all Sodexho businesses in France represented 1.82% of total payroll.

The rate of female participation in work-related training is improving, and should eventually match that of female representation in the workforce.

Workforce by gender

Employees receiving training by gender

There were 214,398 training hours in Fiscal 2007, representing an increase of 18.3% over Fiscal 2006.

Sodexho favors in-house training, especially for skills-acquisition at our various sites. More than 100 managers and supervisors (including specialist trainers, line managers and support managers) regularly run training sessions. Wherever possible, training sessions take place on site.

1. Scope: 74% of average number of employees in France during Fiscal 2007.* See Glossary for defi nition.



1.2.11 Employment and placementSodexho won the “2006 Corporate Diversity Award for Innovations” for its commitment to promoting equal opportunity. The award was presented by the Deputy Minister of Equal Opportunity during the closing ceremony of the “Diversity Tour de France”. The 18-city “Tour” was launched in October 2006 to build corporate awareness and support for progressive approaches to diversity, highlighting positive examples and best practices.

In connection with its national affi liation with Restos de Coeur and particularly, with the support of the association for placing workers, Sodexho offered employment to 30 individuals followed by Restos de Coeur during Fiscal 2007.

Disabled workersSodexho affiliates in France employ 722 disabled workers, a 12.3% increase from August 31, 2006 including 10 managers and 62 supervisors. An agreement concerning disabled employees was signed by the Group’s social partners and subsequently endorsed by the Department of Work and Employment in October, 2006. This agreement formalized Sodexho France’s commitment to recruit 200 disabled workers, 50 disabled apprentices and 150 disabled trainees.

70 human resource and operational manages were trained in recruiting disabled candidates and, Sodexho organised, with l’Adapt, for the tenth consecutive year, a week dedicated to the employment of people with disabilities.

PrisonersUnder a contract with the Minister of Justice, SIGES is involved in the rehabilitation of offenders. Two Business Relationship managers collaborate with more than 235 companies in a program developed by SIGES to return offenders to employment.

During Fiscal 2007, as a result of this program, 81 inmates were successful in fi nding long-term employment upon their release from correctional facilities in Bapaume and Longuenesse (France).

After two years of negotiation, SIGES was able to fi nalize with the Ministry of Justice a partnership between the Nord Pas de Calais Region of the Building and Public Works (BTP) Employer Insertion (GEIQ), the St. Omer (62) Chamber of Commerce and Industry (CCI), the Nord Pas de Calais Regional Chamber of Trade and Craftmanship (CMA) and the St. Omer (62) Local Insertion Plan for Employment. This partnership allows for the employment needs of the 250 building companies belonging to GEI to be met by the competencies of individuals held in the Longuenesse correctional facility. In order to respond to the needs of these labor-intensive businesses, this partnership allows for 20 inmates per year to be employed by these building companies. Orientation, follow-up and tutoring activities are jointly sponsored by SIGES and the Ministry of Justice. To date since the start of the program in February 2007, 7 inmates have already benefi ted from employment as a result of this partnership.

Unskilled youth unemploymentIn June, 2005, Sodexho France Food and Facilities Management services signed the “Charte de l’Apprentissage” which formalized Sodexho’s commitment to increase by 20% the number of apprenticeships in the next two years. As of December 31, 2006 Sodexho in France had 303 apprentices, a 31% increase since December 31, 2005.

SeniorsAt the end of Fiscal 2007, employees over 55 years of age represented 7% of the employees of Sodexho France Food and Facilities Management services. This population increased by 5% over the prior Fiscal year.

During Fiscal 2007, 8 people more than 55 years of age were promoted and 33 were hired for permanent positions.

1.2.12 WelfareThe contribution to the fi nancing of social and cultural activities promoted by the various Works Councils represented 0.6% of payroll.



2. ENVIRONMENTAL INFORMATION

As part of its sustainable development policy Sodexho is committed to protecting the environment in the countries where it operates. Respect for the environment means creating the right framework for quality of life. Although Sodexho is not regarded as a polluting business, it is particularly sensitive to ecological issues, for both clients and consumers. Sodexho’s response to the imperatives of environmental protection mobilizes all of its resources. It is not enough just to identify and reduce the risks arising from activities; Sodexho goes further, delivering concrete solutions not only to clients, but also to the wider community.

In 2003, Sodexho committed itself to being an environmental custodian, anchoring this commitment in the Ethical Principles and Sustainable Development Contract. This founding document stated Sodexho’s environmental responsibility policy: environmental stewardship is a way of creating the conditions for a better quality of life. In all host countries where Sodexho operates Sodexho carefully follows local laws concerning the conservation of natural resources.

Sodexho has chosen to focus on four areas of environmental action:

preventing pollution;

recycling;

energy control;

reduction of water consumption.

2.1 Preventing pollutionSodexho is committed to making every effort to analyze, treat and reduce any pollution created by its activities. More and more initiatives are being launched in the countries where it operates to prevent environmental risks and to protect the environment by limiting the pollution caused by its activities.

Among the different actions taken by Sodexho are:

reducing utilization of natural resources;

choosing ecologically sound solutions;

reducing carbon emissions;

using electronic rather than paper media;

offsetting actions with negative ecological effects by those which favor the environment.

••••

•••••

Local programs in this area include:

In France, 3,000 Sodexho restaurants proposed 100% recycled paper napkins. Optimization of the logistics chain has resulted in the last several years of a reduction in the number of site deliveries as a result of better adapted vehicles, from 31 monthly deliveries in 1996 to 15 in 2006.

In the United States, Sodexho’s remote sites in Prudoe Bay in Alaska received approximately 140 truck deliveries a year. The choice to switch to ship deliveries resulted in a savings of 92,540 gallons of fuel in a year.

2.2 RecyclingThe waste Sodexho generates mainly relates to products used in the preparation of meals (plus leftovers) and in various cleaning activities. This waste is non-hazardous, and mainly consists of packaging (paper, board, plastic, glass, metal and wood), and the rest is grease and soap residues.

Sodexho is developing a policy aimed to reduce the amount of packaging produced at source (without comprising product safety and quality), and also to recycle waste as much as possible.

For several years, Sodexho has systematically complied with waste collection plans. However, its concern for the environment is increasingly leading it to encourage suppliers and partners to:

signifi cantly reduce inner and outer packaging;

use recyclable or biodegradable materials;

re-use pallets and boxes.

Sodexho concentrates its efforts in this area on collecting and recycling used cooking oil. Around the world, Sodexho has instituted action plans and information drives for customers and clients about the benefi ts of recycling.

In the United Kingdom, Sodexho generated 500,000 liters of used cooking oil in 2007: these waste products were collected and recycled through a service provider authorized to treat bio-diesel fuel, as a result of the separation of methanol and sodium dioxide.

In Australia, Sodexho decided to only use cooking oil made from canola because it can be transformed into bio-fuel. Sodexho objective is now to have the logistics companies who make deliveries use this fuel.

In Sweden, an original partnership between Sodexho and Ragn Sells, a leader in the Swedish recycling market implemented a rigorous recycling program called “greenbacks” on 10 client sites, including Lärarförbundet (the Swedish Teachers Union). Training for this program involved 150 Sodexho employees.

•••



2.3 Energy ControlThe energy Sodexho uses is supplied by clients, and in most cases Sodexho has no direct control over energy consumption because there are no meters for our production centers. Sodexho uses electricity, but also natural gas, and sometimes a combination of the two. Sodexho is aware of concerns about the depletion of fossil fuel reserves, and is actively seeking energy-saving solutions for sites.

Technical services teams are working to reduce water and energy consumption by:

selecting low-energy cooking and washing equipment;

systematically using devices like time-switches that automatically reduce consumption;

using heat pumps or other renewable energy sources;

choosing environment-friendly vehicles.

Effective maintenance ensures that equipment remains in optimal condition for as long as possible, thereby helping to protect the environment.

Management make sure that their teams know how to use equipment properly, as this can signifi cantly reduce energy use. Simple training initiatives can also help reduce the environmental impact of the Group’s practices.

In Thailand, Sodexho teams brought concrete technical solutions in connection with a Facilities Management contract to the Bangkok medical center, the largest private hospital in Thailand in order to reduce the consumption of electricity.

In the United Kingdom, Sodexho has converted 97 of its sites and offi ces to “green energy”, as well as a reduction of 738 tons in CO2 as a result of a process called Good Quality Combined Heat and Power (GQCHP).

•

•

•

•

2.4 Water consumptionSodexho encourages consumers to use drinking water sensibly, and is improving its waste water treatment techniques. Before being discharged into the sewerage system, waste water is treated by various installed retention systems (such as grease and starch traps). These facilities are scrupulously maintained to optimize their effectiveness and thereby produce waste water that is relatively free from pollutants – and therefore easier to treat when it re-enters the public water supply.

In Chile, Sodexho has developed the SodexH2O program, designed to make staff and clients aware that water is a scarce resource and should be used sensibly. This program has reached a total of 1,700 people.

2.5 ISO 14001 Certifi cation/LEEDSodexho’s sites have made considerable progress in connection with managing environmental concerns in the past years. In addition, ISO 14001 certifi cation has been obtained in sites in 12 countries (Australia, Belgium, Denmark, Finland, France, China-Hong Kong, India, The Netherlands, Peru, Romania, Sweden and the United Kingdom). In the U.S., where the environmental reference is Leadership in Energy and Environmental Design (LEED), several sites have received this accreditation.

2.6 Pro-environment Partnerships

Some of its subsidiaries at the cutting edge of the environmental agenda have put in place an annual self-audit to measure past performance and identify areas for improvement. Sodexho also encourages partnerships with suppliers and producers who wish to adopt environment-friendly policies for the sourcing, processing and delivery of products.

On a broader level, Sodexho is developing an increasing number of pro-environment partnerships with clients and the broader community aimed at fi nding concrete, sustainable solutions.



2.7 Raising environmental awareness

Sodexho helps promote eco-friendly farming and organic produce through local agricultural partnerships in the United Kingdom, the Netherlands and the United States. In order to respond to customers’ expectations, Sodexho promotes organic food products so as to balance the relationship between man and nature.

Sodexho also runs awareness programs for employees, clients and consumers, to spread information about its environmental programs and extend the best practice developed over recent years.

In the United States, Sodexho has placed an emphasis on a training program called “The Future is in Our Hands: PLANit” for its employees and site managers. The program’s objective is to train 350 trainers who will then be able to reach a total of 1,500 employees.

In schools and colleges, Sodexho works with local authorities and students to raise awareness among the younger generation of the importance of waste sorting and careful use of water and energy.

2.8 Awards and DistinctionsSodexho’s commitment to the environment and to sustainable development is demonstrated by the many awards it has received from external bodies for its work in this area.

United Kingdom: Sodexho’s subsidiary Tillery Valley Foods (TVF) which specializes in the preparation of chilled and frozen prepared meals for the Health Care sector received the Green Dragon Level 2 standard. This environmental standard is unique to Wales and recognizes environmental activities by businesses.

United States: in 2007 Sodexho was awarded the Chuck Haugen Conservation Fund’s Business of the Year award for its work at California State University Monterey Bay for sustainable food options and waste recycling. At the University of California Davis (UCDavis) Sodexho received the “Best Practice Award for Innovative Waste Reduction” as part of the Energy Effi ciency Partnership Program for its waste reduction program.



5. Information on the issuer

Sodexho Alliance Individual Company Financial Statements 192

1. Income Statement 1922. Balance Sheet 1933. Notes to the Individual Company Financial Statements 194Auditors’ Reports 208

Supplemental Information on the Individual Company Financial Statements 210

1. Five-Year Financial Summary 2102. Appropriation of Earnings 2113. List of Investments 212

Employment and environmental information relating to the issuer 214

1. Employment data 2142. Environmental information 216


5. Information on the issuerSodexho Alliance Individual Company Financial Statements

Sodexho Alliance Individual Company Financial Statements

1. INCOME STATEMENT

(in thousands of euro) Note Fiscal 2007 Fiscal 2006

Revenues 3 39,020 42,117

Other income 129,865 124,544

Purchases (354) (2,325)

Employee costs (22,403) (19,358)

Other external charges (117,846) (90,931)

Taxes other than income taxes (5,087) (4,316)

Depreciation, amortization and increase in provisions (3,660) (3,692)

Operating profi t 19,535 46,039

Financial income/(expense), net 4 123,975 80,467

Exceptional income/(expense), net 5 (42,159) (32,179)

Income taxes 6 34,627 19,432

Net income 135,978 113,759


Information on the issuer 5.Sodexho Alliance Individual Company Financial Statements

2. BALANCE SHEET

ASSETS

(in thousands of euro) August 31, 2007 August 31, 2006

Fixed and intangible assets, net

Intangible assets 3,021 3,786

Property, plant and equipment 4,091 4,856

Financial investments 4,381,074 4,215,953

Total fi xed and intangible assets, net 4,388,186 4,224,596

Current and other assets

Accounts receivable 43,549 41,264

Prepaid expenses, other receivables and other assets 37,766 37,110

Marketable securities 170,160 115,814

Cash 14,249 12,990

Total current and other assets 265,724 207,178

TOTAL ASSETS 4,653,910 4,431,774

LIABILITIES AND EQUITY

(in thousands of euro) August 31, 2007 August 31, 2006

Shareholders’ equity

Common stock 636,106 636,106

Additional paid in capital 1,185,828 1,185,828

Reserves and retained earnings 830,894 843,950

Restricted provisions 472

Total shareholders’ equity 2,653,300 2,665,884

Provisions for contingencies and losses 89,086 47,461

Liabilities

Borrowings 1,839,168 1,631,051

Accounts payable 23,424 25,204

Other liabilities 48,932 62,174

Total liabilities 1,911,524 1,718,429

TOTAL LIABILITIES AND EQUITY 4,653,910 4,431,774



Notes to the Individual Company Financial Statements

1. SIGNIFICANT EVENTS

Tax AuditThe tax audit on the worldwide tax consolidation has been completed with no major fi nancial consequences for the company.

Refi nancingIn order to extend the maturity of the existing debt and take advantage of current market rates, Sodexho Alliance partially refi nanced its debt on March 30, 2007 by issuing a €500 million 7-year bond bearing interest at an annual rate of 4.5%.

Delisting from the New York Stock Exchange (NYSE)On July 16 2007, Sodexho Alliance completed its voluntary delisting from the New York Stock Exchange (NYSE) and the deregistration of its shares from the US fi nancial market (US Security Exchange Act of 1934).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The individual company fi nancial statements have been prepared in accordance with the Plan Comptable Général of 1999 and regulation no.99-03 issued by the Comité de la Réglementation Comptable (CRC).

The valuation and presentation rules used are the same as those used in the prior year.

The fi nancial statements have been prepared using the historical cost convention.

Amounts in tables are in thousands of euro.

Exceptional items comprise items that do not relate to ordinary activities, and certain items that do relate to ordinary activities but are of an exceptional nature.

The balance sheet and income statement of Sodexho Alliance include amounts for branches in France and in French overseas departments and regions.

2.1. Fixed assetsFixed assets are valued at historical cost.

Depreciation is calculated over the useful life of the asset using the straight-line method, which is considered to best refl ect the underlying economic reality.

Intangible assetsSoftware is amortized over four to fi ve years, depending on its useful life.

Property, plant and equipmentThe principal straight-line depreciation rates used are:

Buildings 5%

General fi xtures and fi ttings 10% and 20%

Plant and machinery 10%-25%

Vehicles 25%

Offi ce and computer equipment 20% and 25%

Other property, plant and equipment 10%

Financial investmentsShares in companies and other fi nancial investments are carried at cost. At each balance sheet date, a provision for impairment is recorded if the value in use is less than the carrying amount.

The value in use of investments is determined on the basis of net asset value, profi tability and the future prospects of the investee.

For the most signifi cant of these investments, we also evaluated impairment by comparison of the carrying amount to a value in use based on discounted future cash fl ows, using the following parameters:

after-tax cash fl ows derived from three-year business plans prepared by management, and extrapolated after the initial three-year period using a growth rate specifi c to the business activity and geographic region;

a discount rate based on the average cost of capital.

•

•



Based on the estimated value in use, an investment may be maintained at a carrying amount in excess of the share of book net assets held.

Long-term receivables are carried at face value. A provision for impairment is recorded where the recoverable amount is less than the carrying amount.

2.2. Accounts receivableAccounts receivable are carried at face value. An allowance for doubtful accounts is recorded where the recoverable amount is less than the carrying amount.

2.3. Marketable securitiesMarketable securities are carried at acquisition cost, with any unrealized losses covered by a provision for impairment.

A provision for impairment is recognized for treasury shares held in connection with employee stock option plans when the carrying amount per share held is greater than the exercise price of potentially exercisable options. A provision is also recognized if the quantity of treasury shares held is less than the quantity of potentially exercisable options; this provision is calculated as the difference between the listed market price per share at the balance sheet date and the exercise price, multiplied by the quantity of shares still to be acquired.

2.4. Foreign currency translationForeign-currency revenues and expenses are translated using the exchange rate as of the transaction date. Foreign-currency liabilities, receivables and cash are translated in the balance sheet at the rate prevailing as of the balance sheet date, unless they are hedged. Any difference arising from the retranslation of foreign-currency liabilities and receivables at the closing exchange rate is recorded in the balance sheet in an asset or liability account. A provision for contingencies and losses is recorded to cover unrealized foreign exchange losses included in assets.

2.5. Retirement benefi tsRetirement benefi t obligations due to active employees by law or under collective agreements are recorded off balance sheet. Commitments under complementary retirement plans are estimated using the projected unit credit method based on fi nal salary; they are also recorded off balance sheet, net of any funding for the plan.

2.6. French tax consolidationSodexho Alliance is the lead company in the French tax consolidation, and has sole liability for income taxes for the whole of this tax group. Each company included in the group tax election recognizes the income tax for which it would have been liable had there been no group tax election. Any income tax gains or losses arising from the group tax election are recognized in the Sodexho Alliance fi nancial statements.

In connection with position statement no.2005-G issued on October 12, 2005 by the Urgent Issues Committee of the Conseil National de la Comptabilité on the conditions under which a provision may be recognized in the books of a parent company covered by a group tax election, Sodexho Alliance has elected the accounting treatment described below.

A provision for taxes is recognized in the financial statements of Sodexho Alliance to cover tax losses of subsidiaries which are used to offset income in the group tax election and which will probably be reclaimed by the subsidiary. All tax losses incurred by operating subsidiaries are regarded as probable of being reclaimed by the subsidiary, given that the subsidiary will be able to offset such losses against income once it returns to profi tability. Tax losses incurred by investment holding companies are not covered by a provision, but are disclosed in the notes to the individual company fi nancial statements.



3. ANALYSIS OF REVENUES

Revenues by business activity

Food and Facilities Management services 19,728

Holding company services 19,292

TOTAL 39,020

Revenues by geographic region

France 31,776

French overseas departments and territories 7,244

TOTAL 39,020

4. FINANCIAL INCOME, NET

Fiscal 2007 Fiscal 2006

Dividends received from subsidiaries and equity investments 183,486 152,687

Interest income 29,712 13,123

Interest expense (91,717) (82,422)

Net foreign exchange gain/(loss) 411 (1,194)

Net change in provisions for fi nancial items 2,083 (1,726)

TOTAL 123,975 80,467

5. EXCEPTIONAL INCOME/NET

Net change in provision for negative net assets of equity investments (1,691)

Net expense on treasury shares and commitments under stock option plans (26,338)

Net change in other provisions for contingencies and losses 4,874

Net increase in provisions for tax losses reclaimable by subsidiaries included in group tax election (2,029)

Debt waivers and subsidies granted 0

Net loss on asset disposals (16,975)

Other items 0

TOTAL (42,159)

The net expense (26,338 thousand euro) on treasury shares and purchase commitments for stock option plans comprises:

the release of the provision for Sodexho Alliance shares to be acquired: 12,898 thousand euro;

•

the gain recognized on exercise of stock options: 16,954 thousand euro;

the impairment charge on treasury shares of 56,190 thousand euro.

•

•



6. ANALYSIS OF INCOME TAX EXPENSE

Pre-tax income Income taxes After-tax income

Operating income 19,535 (8,052) 11,483

Financial income, net 123,975 20,833 144,808

Exceptional items (42,159) 21,846 (20,313)

TOTAL 101,351 34,627(1) 135,978

(1) This amount includes the 32,959 thousands euro tax gain arising from the French group tax election.

7. FIXED ASSETS

Gross value: August 31, 2006

Additions in the period

Decreases in the period

Gross value: August 31, 2007

Intangible assets 5,418 1,141 2,273 4,286

Property, plant and equipment 12,392 1,707 113 13,986

Financial investments

- Equity investments 4,157,369 200,161 321,411 4,036,119

- Receivables related to equity investments 131,831 424,589 145,265 411,155

- Other fi nancial assets 4,394 43,889 36,665 11,619

Total fi nancial investments 4,293,594 668,639 503,341 4,458,893

TOTAL FIXED ASSETS 4,311,404 671,487 505,727 4,477,164

Equity investments

Companies created and acquiredOn August 31, 2007, Sodexho Alliance acquired from its subsidiary Compagnie Financière Aurore International 105,743,170 shares in Sodexho Holdings Limited valued at 193 million euro, thereby increasing the direct interest held by Sodexho Alliance from 79.41% to 100%.

Capital increasesSodexho Alliance made capital increases in the following subsidiaries:

Sodexho Toplu Yemek (1,131 thousand euro);

Sodexho Grande Chine (2 million euro, having subscribed to 100% of the capital increase approved on September 20, 2006);

Excel (1,447 thousand euro, in connection with the transfer of Excel to Sofi nsod).

••

•

DivestmentsOn June 18, 2007, Sodexho Alliance transferred the shares comprising the entire common stock of Excel to Sofi nsod, in exchange for 10,732 Sofi nsod shares.

On March 13, 2007, Sodexho Alliance divested all 1,529,488 of its shares in Sodexho Hellas.

On June 6, 2007, Sodexho Alliance approved the dissolution without liquidation of Astilbe SAS, representing 3,024,875 shares with a value of 304,477 thousand euro. This dissolution resulted in the transfer of all of Astilbe SAS’s net worth to Sodexho Alliance.



8. DEPRECIATION AND AMORTIZATION

Accumulated: August 31,2006

Increases in the period

Decreases in the period

Accumulated: August 31, 2007

Intangible assets 1,631 203 569 1,265

Property, plant and equipment 7,536 2,385 26 9,895

TOTAL 9,167 2,588 595 11,160

9. AMOUNTS AND MATURITIES OF RECEIVABLES AND OTHER ASSETS

Gross valueLess than

1 yearMore than

1 yearAmortization & provisions

Carrying amount

Equity investments 4,036,119 4,036,119 77,683 3,958,436

Receivables related to equity investments 411,155 411,155 411,155

Other fi nancial investments(1) 11,619 11,619 136 11,483

Total financial investments 4,458,893 411,155 4,047,738 77,819 4,381,074

Accounts receivable 46,374 46,374 2,825 43,549

Prepaid expenses, other receivables & other assets 41,930 41,727 203 4,164 37,766

Total receivables 88,304 88,101 203 6,989 81,315

TOTAL 4,547,197 499,256 4,047,941 84,808 4,462,389

(1) Including treasury shares held in connection with the liquidity contract (see note 12).

There are no securitized trade assets.



10. PROVISIONS

Amount as of August 31,

2006

Increases and charges

in the period

Decreases, releases and

reclassifi cations in the period

Amount as of August 31,

2007

Provisions for contingencies and losses 47,461 63,706 22,081 89,086

Provisions for impairment

- fi nancial investments 77,641 20,438 20,260 77,819

- current assets 7,632 3,844 3,788

Total provisions for impairment 85,273 20,438 24,104 81,607

TOTAL 132,734 84,144 46,185 170,693

Comprising

- operating items 693 2,317

- fi nancial items 21,733 23,816

- exceptional items 61,718 20,052

Provisions for contingencies and lossesAs of August 31, 2007, the main provisions for contingencies and losses were:

provision for tax losses reclaimable by subsidiaries included in group tax election: 16,270,344 euro;

•

provision for treasury shares to be acquired: 9,133,936 euro;

provision for impairment of treasury shares: 56,190,559 euro;

risks related to negative net assets of subsidiaries: 5,278,077 euro;

other items: 2,213,509 euro.

•

•

•

•

11. MARKETABLE SECURITIES

Gross value August 31, 2007

Provisions for impairment

Carrying amount

August 31, 2007

Carrying amount

August 31, 2006

Money-market mutual funds 42,631 42,631 39,939

Treasury shares 122,126 122,126 75,875

Cash under Oddo liquidity contract 5,403 5,403

TOTAL 170,160 170,160 115,814



12. TREASURY SHARES

MOVEMENTS IN TREASURY SHARES DURING THE PERIOD

Marketable securities Other fi nancial investments

Number of shares held

September 1, 2006 2,889,005 56,400

Acquisitions 1,830,040 1,521,402

Disposals (2,284,353) (1,366,502)

August 31, 2007 2,434,692 211,300

Gross value of shares held

September 1, 2006 79,247 2,137

Acquisitions 101,075 75,807

Disposals (58,196) (67,297)

August 31, 2007 122,126 10,647

Shares sold to employees on exercise of previously granted stock options.

13. SHAREHOLDERS’ EQUITY

13.1 Common stockThere were no changes in common stock during fi scal 2007. As of August 31, 2007, common stock totaled 636,105,652 euro, divided into 159,026,413 shares, including 25,722,952 with double voting rights.

13.2 Changes in shareholders’ equity

(in thousands of euro)

Shareholders’ equity at end of previous fi scal year 2,665,884

Dividends approved by Annual Shareholders’ Meeting and paid (151,075)

Dividends on treasury shares 2,105

Net income for the fi scal year 135,978

Restricted provisions 472

Other (64)

Shareholders’ equity at end of fi scal year 2,653,300

Sodexho Alliance is in compliance with articles L. 225-210 and L. 225-214 of the French Commercial Code because in addition to the legal reserve, it has other reserves at least equal to the value of treasury shares held.



14. AMOUNT AND MATURITY OF LIABILITIES

Gross amount Less than 1 year 1 to 5 years More than 5 years

Bond issues 1,818,590 41,096 1,277,494 500,000

Bank overdrafts 262 262

Borrowings from related companies 20,317 20,317

Other borrowings

Sub-total: borrowings 1,839,169 61,675 1,277,494 500,000

Accounts payable 23,424 23,424

Other liabilities 48,932 48,931

TOTAL 1,911,524 134,030 1,277,494 500,000

There are no bills of exchange included in payables.

15. BOND ISSUES AND OTHER BORROWINGS

300 million euro bond issueOn March 16, 1999, Sodexho Alliance issued bonds for 300 million euro.

The bonds are redeemable at par on March 16, 2009, and bear interest at an annual rate of 4.625% payable annually on March 16.

On March 30, 2007, Sodexho Alliance redeemed bonds from this issue for a total nominal value of 12.7 million euro.

1,000 million euro bond issueOn March 25, 2002, Sodexho Alliance issued bonds for 1,000 million euro, redeemable at par on March 25, 2009.


On March 30, 2007, Sodexho Alliance redeemed bonds from this issue for a total nominal value of 9.7 million euro.

2007 bond issueOn March 30, 2007, Sodexho Alliance issued bonds for 500 million euro, redeemable at par on March 30, 2014. The bonds bear interest at an annual rate of 4.50%, payable annually on March 28.

None of these bond issues is subject to financial covenants.

Other borrowings

April 2005 multi-currency revolving credit facilityOn April 29, 2005, Sodexho Alliance and Sodexho, Inc. contracted a multi-currency revolving credit facility of up to 460 million euro plus 700 million US dollars. The maturity date of this facility initially was April 29, 2010, but may be extended at the request of Sodexho Alliance (subject to consent from the lenders), initially to April 29, 2011 and subsequently to April 26, 2012. On March 27, 2006, the lenders agreed to an initial extension of the facility to April 29, 2011. On April 18, 2007, Sodexho obtained a further extension of the facility from the lenders, to April 26, 2012.

As of August 31, 2007, no funds were drawn down under this facility, which was being used solely for the issuance of bank guarantees of 113 million US dollars (83 million euro).

This credit facility is not subject to any fi nancial covenants, but requires the borrower to comply with the standard clauses contained in this type of syndicated credit agreement. In the event of non-compliance with these clauses, bankers representing at least two-thirds of the agreed facility are entitled to demand early repayment of the balance outstanding under the facility.

Early repayment of the facility would also give holders of the March 2002 1 billion euro bond issue and the March 2007 500 million euro bond issue the right to demand early redemption of their bonds.



16. ACCRUED EXPENSES

Borrowings 41,096

Accounts payable 8,175

Tax and employee-related liabilities 9,676

Other liabilities 0

TOTAL 58,946

17. FINANCE LEASES

BuildingsOther property, plant

and equipment Total

Original cost 10,231 3,546 13,777

Acquisitions

Retirements

TOTAL 10,231 3,546 13,777

Depreciation

Accumulated depreciation at start of period 7,863 1,818 9,681

Retirements

Charge for the period 1,087 913 2,000

TOTAL 8,950 2,731 11,681

Lease payments

Accumulated lease payments at start of period 10,900 2,280 13,180

Retirements

Lease payments made in the period 1,519 832 2,351

TOTAL 12,419 3,111 15,531

Outstanding lease obligations

Within no more than 1 year 1,480 452 1,932

Within more than 1 year but no more than 5 years 500 381 881

After more than 5 years

TOTAL 1,980 833 2,813

Of which residual value

Within no more than 1 year

Within more than 1 year but no more than 5 years 1,281 814 2,095

After more than 5 years

TOTAL 1,281 814 2,095

Amount expensed during the period 1,519 832 2,351



18. RELATED COMPANY INFORMATION

Subsidiaries Associates Other investees

ASSETS – GROSS VALUES

Equity investments 4,031,554 1,117 3,448

Receivables related to equity investments 411,155

Other investment securities 76

Advances to suppliers 15

Accounts receivable 26,294

Other operating receivables

Due from related companies 13,487

Non-operating receivables 5

TOTAL 4,482,586 1,117 3,448

LIABILITIES

Advances from clients

Accounts payable 11,095

Other operating liabilities

Due to related companies 1,592

TOTAL 12,687

Income statement

Financial income 209,992 5,693 57

Financial expenses 29,320 628

Subsidiaries: companies fully consolidated by Sodexho Alliance.

Associates: companies equity-accounted by Sodexho Alliance, and non-consolidated companies in which Sodexho Alliance holds an equity interest of more than 10%.

Other investees: companies in which Sodexho Alliance holds an equity interest of less than 10%.



19. FINANCIAL COMMITMENTS

Commitments made by Sodexho Alliance

August 31, 2007 August 31, 2006

Performance bonds given to Sodexho Group clients 571,410 539,046

Financial guarantees to third parties 236,127 751,916

Retirement benefi t commitments 2,126 2,233

Other commitments 61,236 5,955

Virtually all fi nancial guarantees to third parties are in respect of loans to Sodexho Alliance subsidiaries.

New 12 year leases signed on October 19 2006, and related to the move to new company headquarters

in 2008 increased commitments given for offi ce leases by 53.8 million euros.

Commitments received by Sodexho Alliance

August 31, 2007 August 31, 2006

1,777,827 1,330,660

Sodexho, Inc. has counter-guaranteed Sodexho Alliance’s borrowings.

Financial instrument commitmentsSodexho Alliance contracted new fi nancial instrument commitments during fi scal 2007. The only ongoing commitment as of August 31, 2007 was as follows:

DescriptionInception

dateExpiry

dateNominal amount

Interest rate paid

Interest rate

received

Hedged exchange

rate

Market value of

swaps August 31,

2007

Cross currency swap contracted to hedge a loan to Sodexho, Inc.

$550,000,000 5,8775%($) €1.3664 = $1 €135 ,876

August 2007

February 2008 €403,078,000 5.157%(€)



20. PRINCIPAL FUTURE ADJUSTMENTS TO THE TAX BASE

Increases in the tax base

Unamortized deferred charges 581

Notional expenses on parent company dividends receivable 0

Reductions in the tax base

Provision for shares to be acquired 9,134

Provisions for doubtful receivables 13

Provision for remediation costs 0

Other non-deductible provisions 152

The future deferred tax asset based on this tempory tax difference amounts to 3,001 thousand euro.

21. RETIREMENT BENEFIT COMMITMENTS

Retirement benefi ts payable by law or under collective agreementsSodexho Alliance is required to pay benefi ts to retiring employees on the terms stipulated in a company-wide collective agreement. The amount of the commitment has been calculated on the basis of rights vested at the balance sheet date, building in assumptions about fi nal salary, discount rates and employee turnover.

This commitment, which is not recognized as a liability in the balance sheet, is estimated at 483 thousand euro.

Commitments related to the complementary retirement planSodexho Alliance also has a commitment with respect to a complementary retirement plan. The amount of the commitment, estimated using the projected unit credit method based on fi nal salary and net of funding for the plan, is 1,643 thousand euro.

22. TRAINING

Sodexho Alliance is required to provide a certain number of training hours to its employees in France (“Droit Individuel

à la Formation”). As of August 31, 2007 the number of hours was approximately 5,200.

23. DIRECTORS’ FEES

Directors’ fees paid to members of Sodexho Alliance’s Board of Directors in fi scal 2007 totaled 455 thousand euro.



26. CONSOLIDATION

Sodexho Alliance is consolidated in the fi nancial statements of Bellon SA, which has its registered offi ce at 2, place d’Arvieux, Marseille, France.

27. POST-BALANCE SHEET EVENTS

In June 2007, Sodexho Alliance signed an agreement to sell an offi ce building located at Montigny-le-Bretonneux, France. The sale was completed in early September.

On October 31, 2007, Sodexho acquired 100% of Circles, a leading player in consumer and employee loyalty programs

in North America. This acquisition reinforces Sodexho’s expertise in quality-of-life services and will generate signifi cant synergies across all Sodexho’s client segments in North America.

25. AVERAGE NUMBER OF EMPLOYEES

Managerial 126

Supervisory 36

Other 34

Apprentices 2

TOTAL 198

The average number of employees for the fi scal year is an average of the number of employees in service at the end of each quarter, and comprises employees working at Sodexho Alliance branches in France and the French overseas departments and regions.

24. GROUP TAX ELECTION

Gain arising from group tax electionSodexho Alliance recognized a gain of 32,959 thousand euro from the Group tax election for Fiscal 2007. This gain represents the difference between the income tax liability of Sodexho Alliance as lead company in the tax group and the aggregate of the income tax charges recognized by the French subsidiaries included in the group tax election.

Tax losses reclaimable as of August 31, 2007The amount of potentially reclaimable tax losses as of August 31, 2007 was 47,256 thousand euro. The provision as of that date (adjusted to a tax rate of 34.43%) was 16,270 thousand euro.

The balance of losses generated by subsidiaries that operate as holding companies was 99,909 thousand euro.



28. LIST OF SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

(in thousands of euro) Capital

Other sha-reholders’

equity*

Percentage interest

in capital

Book value of investment

Loans and

advances granted,

netGuaran-

tees given

Revenues for most

recent fi s-cal year*

Net income for

most re-cent fi scal

year*

Dividends received

during the fi scal yeargross net

Detailed information

French subsidiaries

Holding Sogeres 6,098 11,651 100.00% 104,702 104,702 3,503

Sodexho Pass International 117,780 (18,768) 91.24% 107,458 107,458 56,754 33,245

Sofi nsod 21,283 56,318 100.00% 72,460 72,460 16,261 16,598

Universal Sodexho SAS 31,712 18,337 100.00% 31,400 31,400 1,025 82 (3,131)

Société Française de Restauration 10,643 12,281 93.49% 12,553 12,553 496,977 12,679 10,385

Gardner Merchant Groupe 34,330 (31,724) 100.00% 12,348 12,348 10 836

Société Française de Restauration & Services 1,899 2,239 86.20% 9,649 9,649 1,978 209,948 5,589 3,143

Ouest Catering SAS 516 8,222 100.00% 9,200 9,200 1,638 663

Holding Altys 8,016 2,237 100.00% 8,016 8,016 20,775 1,996

Sodexho Grande Chine 8,602 7,506 99.36% 8,547 8,547 (2,009)

Sodexho IS&T 6,500 1,117 100.00% 6,500 6,500 2 (219) 1,316

French equity investments

Sogeres 1,985 185,974 37.08% 72,567 72,567 374,802 3,429 2,299

Foreign subsidiaries

Sodexho, Inc. 110 1,579,750 100.00% 2,377,539 2,377,539 402,518 188,863 5,164,928 107,964 60,837

Sodexho Holdings Limited 460,743 390,964 100.00% 751,028 751,028 10,623 (11,391)

Sodexho Scandinavian Holding AB 56,551 24,133 100.00% 86,089 86,089 13,337 398,065 11,217

Sodexho Awards 14 (9,890) 100.00% 45,684 7,803 3,049

Compagnie Financière Aurore International 58,007 135,637 100.00% 68,918 68,918 (40)

Sodexho Catering & Services GmbH 1,023 30,418 100.00% 37,507 37,507 148,305 4,366

Sodexho Australia 28,857 (5,762) 100.00% 36,378 36,378 14,077 39,111 (2,076)

Sodexho España 3,467 20,476 98.86% 26,804 26,804 132,249 2,515

Sodexho Belgique 4,299 21,786 73.74% 26,887 26,887 229,391 7,180 4,339

Sodexho Venues Australia Pty 18,551 (15,580) 100.00% 21,729 4,554 10,266 2,078

Sodexho Chile 10,850 6,775 99.94% 10,911 10,911 1,675 178,583 783 965

Kalyx 22 8,795 100.00% 9,430 9,430 82,786 7,728 5,829

Sodexho Mexico 9,766 (4,633) 100.00% 8,673 8,673 27,077 516

Aggregate information

Other French subsidiaries 12,950 7,004 3,266 8,770 11,450

Other foreign subsidiaries 54,970 40,847 1,403 144,620 26,303

Other French equity investments 408 42 22

Other foreign equity investments 4,814 2,622 53

TOTAL 4,036,119 3,958,436 407,187 384,968 176,784

* Based on financial statements adjusted for the purposes of consolidation by the Sodexho Group.



STATUTORY AUDITORS’ REPORT ON THE STATUTORY FINANCIAL STATEMENTS

Year ended 31 August 2007SODEXHO ALLIANCE S.A. 3, avenue Newton 78180 Montigny-le-Bretonneux

D


In compliance with the assignment entrusted to us by your General Meeting, we hereby report to you, for the year ended August 31st, 2007, on:

the audit of the accompanying fi nancial statements of Sodexho Alliance S.A.;

the justifi cation of our assessments;

the specifi c verifi cations and information required by law.

These fi nancial statements have been approved by the Board. Our role is to express an opinion on these fi nancial statements based on our audit.

I - Opinion on the fi nancial statementsWe conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the management, as well as evaluating the overall fi nancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the fi nancial statements give a true and fair view of the Company’s fi nancial position and its assets and liabilities, as of August 31st, 2007, and of the results of its operations for the year then ended in accordance with the accounting rules and principles applicable in France.

II - Justifi cation of our assessmentsIn accordance with the requirements of article L.823-9 of the Commercial Code (Code de Commerce) relating to the

•

••

justifi cation of our assessments, we bring to your attention the following matter:

Your Company has valued fi nancial investments held in accordance with the accounting principles set out in note 2.1 of the summary of signifi cant accounting policies in the notes to the fi nancial statements. We performed procedures in order to assess the data and assumptions on which the valuations were based and reviewed the calculations made by your Company.

The assessments were made in the context of our audit of the fi nancial statements, taken as a whole, and therefore contributed to the formation of the opinion expressed in the fi rst part of this report.

III - Specifi c verifi cations and information We have also performed the specifi c verifi cations required by law in accordance with professional standards applicable in France.

We have no matters to report regarding:

the fair presentation and the conformity with the fi nancial statements of the information given in the management report of the Board of Directors, and in the documents addressed to the shareholders with respect to the fi nancial position and the fi nancial statements;

the fair presentation of the information provided in the management report of the Board of Directors in respect of remuneration granted to certain company offi cers and any other commitments made in their favor in connection with, or subsequent to, their appointment, termination or change in function.

In accordance with the law, we verifi ed that the management report contains the appropriate disclosures as to the percentage interests and votes held by shareholders and disclosures as to the acquisition of shares and controlling interests.

•

•

•





This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. The statutory auditors’ report includes information specifi cally required by French law in all audit reports, whether qualifi ed or not, and this is presented below the opinion on the fi nancial statements. This information includes an explanatory paragraph discussing the auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the fi nancial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.


Information on the issuer 5.Supplemental Information on the Individual Company Financial Statements

STATUTORY AUDITORS’ REPORT ON REGULATED AGREEMENTS AND COMMITMENTS

Year ended 31 August 2007SODEXHO ALLIANCE S.A. 3, avenue Newton78180 Montigny-le-Bretonneux

D


In our capacity as statutory auditors of your Company, we hereby present to you our report on the regulated agreements and commitments.

Agreements and commitments entered into by the Company in financial year 2007

In accordance with article L.225-40 of the Commercial Code we have been advised of agreements and commitments which have been previously authorised by your Board of Directors.

We are not required to ascertain whether any other agreements or commitments exist but to inform you, on the basis of the information provided to us, of the terms and conditions of the agreements and commitments of which we were notifi ed. It is not our role to determine whether they are benefi cial or appropriate. It is your responsibility, under the terms of article R.225-31 of the Commercial Code, to evaluate the benefi ts arising from these agreements and commitments prior to their approval.

We conducted our work in accordance with professional standards applicable in France; those standards require that we perform the procedures deemed necessary so as to verify that the information provided to us is in agreement with the underlying documentation from which it was extracted.

Transfer of sharesOn June 18, 2007, the two following contributions in shares took place:

Sodexho Alliance S.A. contributed all its shares in Excel S.A.S. to Sofi nsod SA.S. and received Sofi nsod S.A.S. shares in exchange, then;

Sofi nsod S.A.S. contributed all its shares in Excel S.A.S. to Loisirs Développement S.A.S. and received Loisirs développement S.A.S. shares in exchange.

Given that those transactions relate to companies owned by the same party, the shares were contributed at the net book value for an amount of 694,636 euros in both cases.

Continuing agreements and commitments which were entered into in prior years

•

-

-

Moreover, in accordance with the Commercial Code (Code de Commerce), we have been informed of the following agreements and commitments, which were approved during previous years and which were applicable during the period:

Contract for assistance and advisory services between Bellon S.A. and Sodexho Alliance S.A. of which Pierre Bellon, Rémi Baudin, Bernard Bellon, François-Xavier Bellon, Sophie Clamens, Nathalie Szabo and Astrid Bellon are directors.

For the year ended August 31, 2007, Bellon S.A. invoiced Sodexho Alliance S.A. an amount of 8,126,800 euros excluding VAT.

Commitments entered into by Bellon S.A. for the benefi t of Mr Michel Landel, Chief Executive Offi cer of Sodexho Alliance S.A.

In the event that his contract of employment is terminated by himself or by Bellon S.A. for any reason other than serious or gross misconduct, Mr Michel Landel will receive over and above the termination payments to which he would be entitled under the law an additional termination benefi t equal to two years’ total salary.

In the event that his contract of employment is terminated by himself or by Bellon S.A. for any reason other than serious or gross misconduct, Mr Michel Landel will receive a non-competition indemnity equal to one year’s total salary. If the contract is terminated by Bellon S.A. for serious or gross misconduct, this indemnity would only become payable if Bellon S.A. were to invoke the non-competition clause.

Bellon S.A. also agreed to enroll Mr Michel Landel in the Sodexho Group executive retirement benefi t plan, in addition to his compulsory retirement benefi t entitlement. Subject to his presence within the Group at the time of his retirement, he will be granted a pension corresponding to 14% of his last annual fi xed remuneration paid by Sodexho Alliance, its parent company or any other subsidiary of the Group. Contributions paid in respect of fi nancial year 2007 amounted to 128,664 euros.

•

•





This is a free translation into English of a report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France.


5. Information on the issuerSupplemental Information on the Individual Company Financial Statements

Supplemental Information on the Individual Company Financial Statements

1. FIVE-YEAR FINANCIAL SUMMARY

(in euro) Fiscal 2007(1) Fiscal 2006 Fiscal 2005 Fiscal 2004 Fiscal 2003

Capital at end of period

Issued capital 636,105,652 636,105,652 636,105,652 636,105,652 636,086,260

Number of ordinary shares outstanding 159,026,413 159,026,413 159,026,413 159,026,413 159,021,565

Number of non-voting preferred shares outstanding - - - - -

Maximum number of potential new shares issuable:

by conversion of bonds - - - - -

by exercise of warrants and options - - - - -

- Warrants - - - - 6,243,718

- Options - - - - 93,248

Income statement data

Revenues 39,020,200 42,117,334 43,188,837 47,277,612 65,741,805

Earnings before income tax, employee profi t-sharing, depreciation, amortization and provisions 142,738,625 109,457,262 81,909,782 65,462,209 77,398,525

Income tax 34,627,337 19,431,725 14,468,156 18,321,581 21,151,093

Employee profi t-sharing - - - - -

Earnings after income tax, employee profi t-sharing, depreciation, amortization and provisions 135,978,445 113,759,209 77,098,733 87,490,294 79,261,607

Dividend payout 182,880,375 151,075,092 119,269,810 111,318,489 97,003,155

Per share data

Earnings after income tax and employee profi t-sharing but before depreciation, amortization and provisions 1.12 0.81 0.61 0.53 0.62

Earnings after income tax, employee profi t-sharing, depreciation, amortization and provisions 0.86 0.72 0.48 0.55 0.50

Net dividend per share 1.15 0.95 0.75 0.70 0.61

Employee data

Average number of employees for the period 198 176 259 236 267

Salary expense for the period 14,930,987 13,535,263 11,348,563 11,336,520 11,939,190

Social security and other employee welfare benefi ts paid during the period 7,472,219 5,823,051 4,984,400 4,336,551 4,759,799

(1) Subject to approval by the Annual Shareholders’ Meeting to be held on January 22, 2008.



2. APPROPRIATION OF EARNINGS

(in thousands of euro) Fiscal 2007(1) Fiscal 2006 Fiscal 2005 Fiscal 2004 Fiscal 2003

Net income 135,978 113,759 77,098 87,490 79,262

Retained earnings 577,832 613,189 653,290(2) 684,765 701,934

Retained earnings(3) 2,040 1,959 2,070 1,465 573

Transfer to legal reserve 0 0 0 (2) 0

Transfer to long-term capital gains reserve 0 0 0 0 0

Transfer from long-term capital gains reserve 0 0 0 0 0

Distributable earnings 715,851 728,907 732,458 773,718 781,769

Net dividend 182,880 151,075 119,270 111,318 97,003

Reserves 0 0 0 2 0

Retained earnings 532,971 577,832 613,188 662,398 684,766

Number of shares outstanding 159,026,413 159,026,413 159,026,413 159,026,413 159,021,565

Number of shares entitled to dividend 159,026,413 159,026,413 159,026,413 159,026,413 159,021,565

Earnings per share (in euro) 0.86 0.72 0.48 0.55 0.50

(1) Subject to approval by the Annual Shareholders’ Meeting to be held on January 22, 2008.(2) Change in accounting method relating to the recognition of a provision in the parent company books entitled to the group tax regime. Impact on opening

shareholders’ equity: 9,110 thousand euro.(3) Dividends on Sodexho Alliance treasury shares and not distributed.


5. Information on the issuerSupplemental Information on the Individual Company Financial Statements

3. LIST OF INVESTMENTS

Number of sharesCarrying amount

at August 31, 2007

I) SUBSIDIARIES AND EQUITY INVESTMENTS

1- FRENCH COMPANIES

Subsidiaries

6,716,104 SODEXHO PASS INTERNATIONAL 107,457,668

399,995 HOLDING SOGERES 104,701,923

1,330,176 SOFINSOD 72,459,963

1,982,009 UNIVERSAL SODEXHO SAS 31,399,929

621,891 S.F.R 12,553,441

2,251,135 GARDNER MERCHANT GROUPE SA 12,348,365

109,154 S.F.R.S 9,649,360

2,503 OCF OUEST CATERING SAS 9,200,000

8,546,658 SODEXHO GRANDE CHINE 8,546,658

500,981 HOLDING ALTYS 8,015,696

1,625,000 SODEXHO IS&T 6,500,000

139,618 S.F.S 2,377,241

3,837 RESTAURATION FRANCAISE 1,005,290

19,998 CIR 787,010

49,995 SOCIETE HOTELIERE ET DE TOURISME DE GUYANE 762,169

38,997 SIGES 608,209

2,490 SOCIÉTÉ DES THERMES DE NEYRAC-LES-BAINS 540,094

387,000 SODEXHO AMERIQUE DU SUD 387,000

10,811 EMIS 172,599

OTHERS: carrying amount < €150,000 individually 363,888

Equity investments

45,998 SOGERES 72,566,845


TOTAL – FRENCH COMPANIES 462,445,348

2- FOREIGN COMPANIES

Subsidiaries

195 SODEXHO, INC. 2,377,539,202

513,646,471 SODEXHO HOLDINGS LTD 751,028,037

5,300,000 SODEXHO SCANDINAVIAN HOLDING AB 86,089,349

136,607 COMPAGNIE FINANCIERE AURORE INTERNATIONAL 68,918,257

1 SODEXHO CATERING AND SERVICES GmbH 37,506,819

62,752 SODEXHO AUSTRALIA 36,378,141

29,046 SODEXHO BELGIQUE 26,887,366

11,407 SODEXHO ESPAÑA 26,804,146

50,700 SODEXHO CHILE 10,910,841

15,000 KALYX 9,430,426

86,662,670 SODEXHO MEXICO 8,672,833

998,000 SODEXHO AWARDS 7,802,642

298,500 SODEXHO OY 4,956,750

20,550,102 SODEXHO INDIA 4,667,881

37,200 SODEXHO VENUES AUSTRALIA 4,553,577

1,860,040 SODEXHO ITALIA 4,029,452



Number of sharesCarrying amount

at August 31, 2007

45,000 AIMS CORPORATION 3,623,285

328,140,279 SODEXHO NIGERIA 2,378,417

67,643 SODEXHO POLSKA 2,037,782

84,996 SODEXHO MAROC 1,910,202

2,044,348 SODEXHO DO BRASIL COMERCIAL Ltda 1,891,858

56,893 SODEXHO SPOLOCNE STRAVOVANI 1,690,782

36,000 SODEXHO PORTUGAL 1,409,000

100,000 SODEXHO MAGYARORSZAG KFT 1,309,924

15,500 SODEXHO MM CATERING 1,194,992

495,499,996 SODEXHO TOPLU YEMEK 1,131,445

10,182 UNIVERSAL SODEXHO THE NETHERLANDS 1,047,349

104,648,427 SODEXHO DOO 1,018,459

29,700 SODEXHO SPOLOCNE 727,603

1,032,035 SODEXHO PERU 705,123

550,000 SODEXHO SINGAPORE 652,348

270,401 SODEXHO INVERSIONES 600,378

1,526,805 SODEXHO AO 447,887

3,835,000 SODEXHO MALAYSIA 386,275

5,000 SISA 381,123

620,000 SODEXHO COSTA RICA 348,130

6,496 SODEXHO GENEVE 320,000

2,808 SODEXHO NOUVELLE-CALEDONIE 296,927

2,499 CATESCO SAS 285,623

1,398 SODEXHO CAMEROUN 211,797

249 SODEXHO PASS CHILE 186,517

2,497 SODEXHO MONACO 177,102


Equity investments

1,299,888 LEOC JAPAN COMPANY LTD 2,261,912

392 TEYSEER SERVICES QATAR 208,024


TOTAL – FOREIGN COMPANIES 3,495,990,774

TOTAL – SUBSIDIARIES AND EQUITY INVESTMENTS 3,958,436,122

II) OTHER INVESTMENT SECURITIES

Others: carrying amount < €150,000 individually 192,904

TOTAL – OTHER INVESTMENT SECURITIES 192,904

III) MARKETABLE SECURITIES EXCLUDING TREASURY SHARES

5,333 KLEBER EURIBOR 12,935,618

278 NATIXIS-CASH 1ER FCP 3DEC 29,695,829

Cash held under Oddo liquidity contract 5,402,564

Others: carrying amount < €150,000 individually 0

TOTAL – MARKETABLE SECURITIES EXCL. TREASURY SHARES 48,034,011


5. Information on the issuerEmployment and environmental information relating to the issuer

Employment and environmental information relating to the issuer

These disclosures relate to the employment and environmental impact of the activities of Sodexho Alliance SA in France (including French overseas departments and territories), and are presented to comply with article L. 225-102-1 of the French Commercial Code.

1. EMPLOYMENT DATA

As of August 31, 2007, Sodexho Alliance employed 212 people in the following categories:

Managers SupervisorsFront line and

other staff Total

Male 62 2 5 69

Female 74 34 35 143

TOTAL 136 36 40 212

Each of these categories corresponds to different functions within the company.

67% of Sodexho Alliance employees are female.

During Fiscal 2007:

a total of 44 individuals were hired on permanent contracts, 42 being hired directly and 2 converted from fi xed-term contracts;

approximately 5.66% of Sodexho Alliance employees were on fi xed-term contracts, and agency staff accounted for 0.54% of hours worked. Fixed-term contracts and agency staff were mainly used in response to temporary peaks in demand for the company’s services.

Sodexho Alliance terminated the contracts of eight employees during Fiscal 2006. None of these was for economic reasons.

In terms of working time within France (including overseas departments and territories), employees worked a 35-hour week.

11 employees worked part-time (3 managerial, 1 supervisory and 7 front-line).

In all, 3,559 overtime hours were worked in Fiscal 2007, representing 1.07% of total hours worked.

The absenteeism rate in Fiscal 2007 was 2.26%.

•

•


Information on the issuer 5.Employment and environmental information relating to the issuer

The number of absentee days was as follows:

Managers SupervisoryFront-line/

Other Total

Work-related and travel-to-work accidents 0 0 10 10

Sick leave 39 87 223 349

Maternity leave 391 0 83 474

Other reasons (unpaid leave, authorized leave, etc) 7 18 278 303

TOTAL 437 105 594 1,136

Average annual gross salaries were as follows:

(in euro) Managers SupervisoryFront-line/

Other

Male 109,796 Immaterial* 28,005

Female 80,517 37,794 26,605

* Not meaningful because there are only 2 employees in this category.

Sodexho Alliance’s activities did not generate any statutory employee-profi t sharing entitlement during Fiscal 2007.

The Health, Safety and Working Conditions Committee met four times, and recorded just 4 work-related accidents which resulted in 10 days of absence from work. The frequency rate1 was 3.02 and the severity rating1 was 0.03.

Sodexho Alliance invested 2.45%2 of total payroll in training, as follows:

Managers SupervisoryFront-line/

Other Total

Number of days’ training 2,021 382 313 2,716

Number of people trained 51 22 6 79

Male (%) 37 5 0 25

Female (%) 63 95 100 75

1 See Glossary for defi nition.

2 2006 Training declaration.

1 See Glossary for defi nition.

2 2006 Training declaration.

Sodexho Alliance spent 23,156 euro on efforts to employ disabled people, and employs two disabled people.

The company also paid 81,946 euro to the Works Council to support its welfare activities.

The average employments represents the average number of employees employed at the end of each quarter and includes employees of Sodexho Alliance in France and in French overseas departments and regions.


5. Information on the issuerEmployment and environmental information relating to the issuer

2. ENVIRONMENTAL INFORMATION

As part of its commitment to sustainable development, Sodexho strives to minimize the direct impact of its service activities on the environment.

Working at the computer, using the printer, taking a coffee break, heating the offi ce, turning on the light, traveling: all these activities affect the environment. An internal group known as the Environmental Life Committee has been established, bringing together representatives from various corporate functions to assess and limit the environmental effect of administrative tasks carried out by Sodexho’s employees.

An initial action plan has been drafted, accompanied by awareness programs at the Montigny site involving a new network of “environmental monitors” and the launch of an environmental policy for offi ces.

Electricity consumption

Fiscal 2006 1,864,753 kWh

Fiscal 2007 1,766,632 kWh

This comsumption represents a 5% reduction from the previous year refl ects moderate weather conditions during the winter and less consumption of heating.

Water consumption

Fiscal 2006 1,546 m3

Fiscal 2007 1,777 m3

The source of the water used at the corporate headquarters is a public supply. The 10% increase in water consumption relates to a variety of factors including the switch from plastic cups of coffee stations to reusable mugs.

Sodexho’s corporate headquarters will transfer in the fi rst half of 2008 to Issy-les-Moulineaux. The new building will permit Sodexho to improve its pro-environment activities.


6. General Information

General Information about Sodexho Alliance and its Issued Capital 218

1. General information about Sodexho Alliance 2182. General Information about the Issued Capital 220

Condensed Group Organizational Chart 225


6. General InformationGeneral Information about Sodexho Alliance and its Issued Capital

General Information about Sodexho Alliance and its Issued Capital

1. GENERAL INFORMATION ABOUT SODEXHO ALLIANCE

The information below is a translation into English of extracts from the Sodexho Alliance bylaws, the full French-language text of which is available on our website at www.sodexho.com.

1.1 Legal name and registered offi ce

Legal name: Sodexho Alliance SA.

Registered offi ce: 3, avenue Newton, 78180 Montigny-le-Bretonneux, France.

Telephone: +33 (0)1 30 85 75 00 Fax: +33 (0)1 30 85 50 88.

1.2 Legal formSodexho Alliance is a société anonyme (joint stock corporation), governed by articles L. 210-1 to L. 247-9 of the French Commercial Code and by Decree no.67-236 of March 23, 1967.

1.3 NationalityFrench.

1.4 Date of incorporation and expiration (article 5 of the bylaws)

“The Company has a life of 99 years from December 31, 1974, saving earlier extension or winding up.”

The date of expiration of the company is December 30, 2073.

1.5 Corporate objects (article 2 of the bylaws)

“The objects of the Company shall be, in France, the French overseas departments and territories or abroad, directly or indirectly, on behalf of third parties or on its own account or in association with third parties:

the development and provision of all services related to the organization of food services and other essential services for corporations and public bodies;

the operation of all restaurants, bars, hotels and more generally all establishments connected with food service, the hotel industry, tourism, leisure and other services, and the ownership and financing thereof;

the provision of some or all of the services required for the operation, maintenance and management of establishments or buildings used for office, commercial, industrial, leisure, healthcare or educational purposes, and for the operation and maintenance of some or all of the equipment installed therein;

the execution of all installation, repair, refurbishment and replacement works on installed equipment;

the provision of advice and of economic, financial and technical surveys relating to all projects and to all services associated with the development, organization and operation of the establishments defined above, and in particular all acts in furtherance of the construction of such establishments and all related consultations and assistance;

the formation of all new companies and the acquisition by whatever means of equity interests in all companies irrespective of their corporate objects;

and more generally all civil, commercial, industrial and financial transactions, and transactions involving movable property or real estate, that are directly or indirectly associated with the aforementioned objects or with all similar or related objects.”

•

•

•

•

•

•

•


General Information 6.General Information about Sodexho Alliance and its Issued Capital

1.6 RegistrationSodexho Alliance is registered in the Versailles Register of Commerce and Companies as no.301 940 219.

1.7 Business identifi er code (APE code)

741 J.

1.8 Consultation of legal documents

Documents relating to the Company which are required to be made available to the public (bylaws, reports, letters and other documents, historical individual company and consolidated fi nancial information for each of the two fi scal years preceding the date of this Reference Document) are available on our website www.sodexho.com and may also be consulted at our registered offi ce (3, avenue Newton, 78180 Montigny-le-Bretonneux, France), preferably by appointment.

1.9 Material contractsAs of today the company has not entered into any material contracts, other than those signed in the ordinary course of business, creating a material obligation or commitment for the entire Group.

1.10 Fiscal year (article 17 of the bylaws)

“The fiscal year commences on September 1 of each year and ends on August 31 of the following year.”

1.11 Appropriation of earnings (excerpt from article 18 of the bylaws)

“(...) 2. The fi rst appropriation of net income, net of any accumulated losses from prior periods, must be an amount of at least 5% of net income to establish the reserve fund required by law. This appropriation ceases to be obligatory once this reserve fund is equal to one-tenth of the issued capital, but must be resumed if for any reason the reserve falls below one-tenth of the issued capital.

3. Distributable earnings comprise net income for the fiscal year, minus any accumulated losses brought forward and any transfer to the legal reserve, plus any retained earnings brought forward.

Distributable earnings are appropriated in the following order:

a) any sum that the Ordinary Shareholders’ Meeting, on the proposal of the Board of Directors, decides to carry forward as retained earnings or to appropriate to the creation of an extraordinary reserve fund, contingency fund or other fund, whether or not created for a specific purpose;

b) any surplus is distributed among the shareholders. (...)”.

1.12 Shareholders’ Meetings (excerpt from article 16 of the bylaws)

1. General Shareholders’ Meetings are called and deliberate on the terms stipulated by the law. They are held at the registered office or at any other place specified in the notice of the meeting.

For the purposes of calculating quorum and majority at shareholders’ meetings, shareholders taking part in said meetings via video-conferencing or telecommunications links enabling them to be identified in accordance with the definitions and conditions relating to such links as stipulated in the relevant laws or regulations are deemed to have attended the meeting.

2. The General Shareholders’ Meeting comprises all shareholders irrespective of the number of shares held by each, provided that all amounts due in respect of such shares have been fully paid.

The right to attend or be represented at shareholders’ meetings is conditional upon:

inclusion in the shareholders’ register in the case of holders of registered shares;

proof of temporary non-transferability of shares in the case of holders of bearer shares.

Said formalities must be completed at least two days before the date of the meeting. However, the Board of Directors has discretion to reduce this time limit provided it does so for all shareholders.

The Board of Directors may, if it sees fi t, provide shareholders with personal admission cards in their names.

When the meeting is held, attendance by a shareholder in person cancels any proxy vote or postal vote.

Postal voting forms will only be taken into account if they are received by the Company at least three days before the Meeting.

•

•



In the event of conflict between these two methods of participating in the meeting, the proxy form will be taken into consideration, subject to votes expressed in the postal voting form.

3. Meetings are chaired by the Chairman of the Board of Directors, or in his absence by the Vice Chairman if one has been appointed, or failing that by the longest-serving Director present.

4. If there is no Director present, the meeting elects its own Chairman.

1.13 Double voting rights (excerpt from article 16 of the bylaws)

Double voting rights are conferred on:

all fully paid shares registered in the name of the same shareholder for at least four years;

•

registered shares allotted free of charge to a shareholder in the event of an increase in the share capital by conversion of earnings, reserves or additional paid in capital in proportion to existing shares held by that shareholder that enjoy double voting rights.

1.14 Share ownership declaration thresholds (excerpt from article 9 of the bylaws)

Any shareholder whose direct or indirect shareholding reaches 2.50% of the Company’s issued capital or any multiple thereof is required to inform the Company by registered letter with acknowledgment of receipt within fifteen days. Failure to make such declaration may result in the shares exceeding the threshold being stripped of voting rights on the terms stipulated by law. This declaration requirement applies equally when a shareholding passes below any of the declaration thresholds.

•

2. GENERAL INFORMATION ABOUT THE ISSUED CAPITAL

2.1 Conditions stipulated in the bylaws for changes in issued capital and shareholder rights

None.

2.2 Changes in issued capital

Fiscal 2007 Fiscal 2006 Fiscal 2005 Fiscal 2004 Fiscal 2003

Capital at end of Fiscal year

Issued capital (euros) 636,105,652 636,105,652 636,105,652 636,105,652 636,086,260

Number of ordinary shares outstanding 159,026,413 159,026,413 159,026,413 159,026,413 159,021,565

Number of non-voting preferred shares outstanding 0 0 0 0 0

Number of fi nancial instruments potentially requiring issuance of new shares via:

- conversion of bonds 0 0 0 0 0

- exercise of warrants or options:

warrants 0 0 0 0 374,773

options 0 0 0 0 93,248



Five-year summary of changes in issued capital

Date Description of transaction

Number of shares

issued

Increase in issued

capitalAdditional

paid in capital

Number of shares post-transaction

Issued capital post-transaction

Aug 31, 2000

Share issue

20,348 €325,568 €1,068,228.90 33,587,529 €537,400,464Stock options (20,348)

Oct 13, 2000

Share issue

1,552 €24,832 €58,950.13 33,589,081 €537,425,296Stock options (1,552)

Dec 6, 2000

Share issue

18,020 €288,320 €591,737.50 33,607,101 €537,713,616Stock options (18,020)

Mar 7, 2001

Share issue

101,112,159 €1,163,724 €2,091,163.19 134,719,260 €538,877,040

Exercise of warrants (22)

Stock options (72,624)

4-for-1 stock split

May 14, 2001

Share issue

273,116 €1,092,464 €5,844,314 134,992,376 €539,969,504

Exercise of warrants (16,062)


ESOP (4,728)

Jul 4, 2001 Share issue 22,498,729 €89,994,916 €922,447,889 157,491,105 €629,964,420

Aug 31, 2001

Share issue

68,549 €274,196 €1,349,699.44 157,559,654 €630,238,616



Oct 18, 2001

Share issue

1,385,848 €5,543,392 €51,985,486.89 158,945,502 €635,782,008(International ESOP)

Jan 11, 2002

Share issue

14,852 €59,408 €314,564.28 158,960,354 €635,841,416

Exercise of warrants (150)


Aug 31, 2002

Share issue

61,062 €244,248 €1,287,974.68 159,021,416 €636,085,664



Aug 31, 2003

Share issue

149 €596 €3,082.05 159,021,565 €636,086,260Exercise of warrants (9)

Aug 31, 2004

Share issue

4,848 €19,392 €100,383.86 159,026,413 €636,105,652Exercise of warrants (291)

2.3 Securities giving access to capitalAs of the date of this Reference Document, there are no securities outstanding that would give immediate or future access to the capital of Sodexho Alliance.



2.4 Capital authorized but not issued

The Extraordinary Shareholders’ Meeting of January 31, 2006 and January 30, 2007 authorized the Board of Directors to increase the Company’s share capital on one or more occasions by issuance of shares, warrants, and/or

securities giving immediate or future access to Sodexho Alliance shares, or by the conversion of earnings, additional paid in capital, reserves or other items into issued capital. Such issues can be made with or without pre-emptive rights and, in the latter case, with priority subscription rights, and are subject to the following limits:

Type of capital increaseMaximum

aggregate par valueDate of

authorizationDate of expiry

Authorizations with pre-emptive rights

- Issuance of shares for cash, or via warrants or other securities €63 million(1) January 31, 2006 March 31, 2008

- Issuance of debt securities €540 million(1) January 31, 2006 March 31, 2008

Authorizations without pre-emptive rights

- Issuance of shares for cash, or via warrants or other securities €63 million(1) January 31, 2006 March 31, 2008

- Issuance of debt securities €540 million(1) January 31, 2006 March 31, 2008

- Authorization to issue shares in a public offering or as acquisition currency 10% of the capital January 31, 2006 March 31, 2008

Authorizations to issue shares to employees

- Stock options 10% of the capital January 31, 2006 March 31, 2009

- Under article L. 225-138 of the French Commercial Code and article L. 443-5 of the French Labor Code (2) January 31, 2006 July 31, 2007

- Under an Employee Stock Ownership Plan (ESOP) €40 million(3) February 3, 2004 February 4, 2009

- Attribution free shares 1% of the capital January 30, 2007 March 30, 2010

(1) These amounts are not cumulative.(2) Share issues reserved for employees are capped at 10% of these authorized capital increases.(3) The aggregate number of shares held directly or indirectly at any time by employees under ESOPs may not exceed 5% of the issued capital.

2.5 Share ownership of Sodexho Alliance SA

2.5.1 Issued capital at August 31, 2007Sodexho Alliance has issued capital of €636,105,652 divided into 159,026,413 shares of €4 each, all fully paid and of the same class.

Holders of fully-paid Sodexho Alliance shares may elect to hold them either as registered shares or as bearer shares identifi able under the relevant laws and regulations, in particular article L. 228-2 of the French Commercial Code.

There are 855 registered shareholders, and the most recent Euroclear survey identifi ed 24,536 holders of bearer shares.

2.5.2 Share ownershipAs of August 31, 2007, Bellon SA owned 36.83% of the issued capital of Sodexho Alliance and Sofi nsod, a 100%-owned subsidiary of Sodexho Alliance, held a direct interest of 18.5% in Bellon SA.

As of August 31, 2007, the following companies had disclosed their shareholdings to Sodexho Alliance:

Caisse des Dépôts et Consignations: 2.76% of the capital and 3.69% of the voting rights;

Arnhold and S. Bleichroeder Advisers, acting on behalf of its managed funds (including First Eagle Funds, Inc): 6.24% of the capital and 5.46% of the voting rights.

As of August 31, 2007, 0.71% of the capital was owned by the employees.

As of August 31, 2007, Sodexho Awards, a 100%-owned subsidiary of Sodexho Alliance, held 443,621 Sodexho Alliance shares, representing 0.28% of the capital, to cover stock options granted to employees of Sodexho, Inc. under the plan awarded by Sodexho Marriott Services and assumed by Sodexho Alliance in 2001 (the SMS plans).

As of August 31, 2007, Sodexho Alliance held 2,645,992 of its own shares, representing 1.66% of the capital:

2,434,692 shares were held to cover stock option plans awarded to Group employees;

211,300 shares were held in connection with the liquidity contract with Oddo Corporate Finance that became effective July 10, 2006.

•

•

•

•



2.5.3 Changes in share ownership

August 31, 2007 August 31, 2006 August 31, 2005 August 31, 2004

Shareholder% of

capital

% of voting rights

% of capital

% of voting rights

% of capital

% of voting rights

% of capital

% of voting rights

Bellon SA 36.83 43.78 36.83 41.90 36.83 41.73 38.53 39.88

Employees 0.71 1.18 1.44 1.96 1.50 2.03 1.70 2.38

Caisse des Dépôts et Consignations 2.76 3.69 3.45 4.79 4.20 5.50 4.69 6.26

Arnhold and S. Bleichroeder Advisers 6.24 5.46 10.05 9.04 10.35 9.36 4.50 4.29

Public 51.52 45.89 46.29 42.31 44.96 41.38 48.67 47.19

Treasury shares 1.94 0 1.94 0 2.16 0 1.91 0

All Sodexho Alliance shares have the same voting rights, except for treasury shares which have no voting rights and nominative shares held for more than four years which have double voting rights.

2.5.4 Share buybacks and disposalsPursuant to the authorization given by the Ordinary Shareholders meeting of January 30, 2007 Sodexho Alliance repurchased between January 31, 2007 and August 3 1,, 2007 a total of 1,830,040 of its own shares, representing 1.15% of the capital, at an average price of 55.23 euro.

Sodexho Alliance transferred 2,284,353 treasury shares on the exercise of stock purchase options during Fiscal 2007.

During Fiscal 2007, Sodexho Awards acquired 668,732 Sodexho Alliance shares, representing 0.42% of the capital, at an average price of 52.56 euro. During Fiscal 2007, Sodexho Awards transferred 365,491 shares in the form of ADRs (American Depositary Receipts) on the exercise of options by Group employees in the United States.

On July 1, 2006, Sodexho Alliance signed a liquidity contract with Oddo Corporate Finance relating to the company’s ordinary shares. The contract complies with the Business Ethics Charter of the AFEI (French Association of Investment Firms) dated March 14, 2005, approved by the Autorité des Marchés Financiers on March 22, 2005.

The contract, which initially ran until August 31, 2006, is renewable for successive 12-month periods.

In order to implement this contract, an amount of 15,000,000 euro was allocated to the liquidity account.

Transactions carried out under the liquidity contract during Fiscal 2007 were as follows:

purchase of 1,521,402 shares for a total of 75,807,566.27 euro, at an average price of 49.83 euro;

disposal of 1,366,502 shares for a total of 67,873,085.08 euro, at an average price of 49.67 euro;

As of August 31, 2007, the liquidity account comprised:

211,300 shares;

5,400,000 euro.

2.6 Declaration thresholds imposed by the bylaws

Any shareholder whose direct or indirect shareholding reaches 2.50% of the Company’s issued capital or any multiple thereof is required to inform the Company by registered letter with acknowledgment of receipt within fi fteen days. Failure to make such declaration may result in the shares exceeding the threshold being stripped of voting rights on the terms stipulated by law. This declaration requirement applies equally when a shareholding passes below any of the declaration thresholds.

Since September 1, 2006 no shareholder has made a declaration.

As of the date of this Reference Document, there were as far as the company was aware no shareholders other than those mentioned in the table above holding 2.50% or more of the capital or voting rights directly, indirectly or in concert.

•

•

••



2.7 Identifi cation of shareholdersSodexho Alliance may make use of its legal rights to identify holders of securities giving immediate or future rights to vote at shareholders’ meetings.

2.8 Employee share ownership

Executive stock option plansThe Ordinary Shareholders’ Meeting of February 26, 2001 authorized the Board of Directors to purchase Sodexho Alliance shares for allotment to employees under stock purchase option plans. This authorization was renewed at the Ordinary Shareholders’ Meetings of February 3, 2004, January 31, 2006, and January 30, 2007.

As of August 31, 2007, 4,557,919 stock purchase options, worth a total of 156,673,094 euro, were still outstanding under plans awarded by Sodexho Alliance; see page 82 for details.

As of August 31, 2007, 472,178 stock purchase options, worth a total of 13,096,382 USD, were still outstanding under the plans awarded by Sodexho Marriott Services and assumed by Sodexho Alliance in 2001 (the SMS plans); see page 83 for details.

As of August 31, 2006, there were no stock subscription options outstanding and liable to be exercised.

Employee Stock Ownership plansThe Extraordinary Shareholders’ Meeting of February 3, 2004 renewed the authorizations granted to the Board of Directors by the Extraordinary Shareholders’ Meetings of February 23, 1993, February 13, 1996, February 21, 2000 and February 4, 2003 to carry out share issues reserved for Group employees under employee stock ownership plans.

The Board of Directors used these authorizations at Board meetings as follows:

October 8, 1993: subscription of 88,000 new shares at a price of 120 euro per share;



June 14, 1996: approval of a new plan involving purchase of Sodexho SA shares on the stock market. Payments

•

•

•

•

into the plan enabled a total of 16,856 shares to be acquired;

October 23, 1997: approval of a new plan involving purchase of Sodexho Alliance shares on the stock market. Payments into the plan enabled a total of 16,420 shares to be acquired;

October 22, 1998: approval of a new plan involving purchase of Sodexho Alliance shares on the stock market. Payments into the plan were received in December 1998;

October 21, 1999: approval of a new plan involving purchase of Sodexho Alliance shares on the stock market. Payments into the plan were received in December 1999;

December 6, 2000: approval of a new plan involving subscription for Sodexho Alliance shares. Payments into the plan enabled a total of 4,728 shares to be issued.

Under the authorization granted by the Extraordinary Shareholders’ Meeting of December 18, 2000, the Board of Directors implemented an international employee stock ownership plan (ESOP) covering 150,000 Group employees in 22 countries. On October 18, 2001, the Board of Directors placed on record that a total of 1,385,848 4 euro shares had been subscribed for by 18,726 employees. The subscription price was 44.10 euro in the United States and 41.51 euro per share elsewhere. The international ESOP is described on page 78 of the Financial Review in the Sodexho Reference Document for Fiscal 2001, fi led with the Commission des Opérations de Bourse (COB) as no.R.01.488.

The employee profi t sharing payments made by certain French companies to the ESOP allowed for the following:

for Fiscal 2001, to purchase 110,000 shares on November 30, 2001;

for Fiscal 2002, to purchase 144,000 shares on December 2, 2002;

for Fiscal 2003, to purchase 85,000 shares on November 28, 2003 and 80,000 shares on January 2, 2004;

for Fiscal 2004, to purchase 72,000 shares on January 14, 2005;

for Fiscal 2005, to purchase 45,000 shares on January 25, 2006;

for Fiscal 2006, to purchase 10,000 shares on December 8, 2006, 40,000 shares on December 20, 2006, 30,000 shares on December 27, 2006, 30,000 shares on December 28, 2006 and 6,000 shares on December 29, 2006.

•

•

•

•

•

•

•

•

•

•


General Information 6.Condensed Group Organizational Chart

Condensed Group Organizational Chart



7. Annual Shareholders’ Meeting

Board Report 228

Ordinary business 228Extraordinary business 230Use of fi nancial authorizations 231

Resolutions submitted to the Annual Shareholders’ meeting of January 22, 2008 232

Ordinary Business 232Extraordinary Business 234Statutory auditors’ special report on the issuance of shares 240Statutory auditors’ special report on employee share issues 241Statutory auditors’ special report on the issuance of shares and share equivalents 242Statutory auditors’ special report on a share capital reduction 243


7. Annual Shareholders’ MeetingReport on the resolutions submitted to the 2008 Annual Shareholders’ Meeting

Board Report

ORDINARY BUSINESSD

Adoption of the fi nancial statements and approval of regulated agreements (1st and 2nd resolutions)The Board of Directors is requesting the Shareholders’ Meeting to adopt the individual company financial

statements of Sodexho Alliance for the year ended August 31, 2007 showing net income of 136 million euro and the consolidated fi nancial statements for the year ended August 31, 2007 showing consolidated net income of 347 million euro, and to approve the appropriation of earnings for fi scal 2007.

The Board is proposing to distribute a cash dividend of 1.15 euro per share.

Fiscal 2007(1) Fiscal 2006 Fiscal 2005 Fiscal 2004 Fiscal 2003

Number of qualifying shares 159,026,413 159,026,413 159,026,413 159,026,413 159,021,565

Net dividend (in euro) 1.15 0.95 0.75 0.70 0.61

Tax credit (in euro) -(2) -(2) -(2) -(2) 0.305

Gross dividend (in euro) 1.15 0.95 0.75 0.70 0.915

Share price on the last trading day of the November following the fi scal year-end (in euro) 43.42 44.83 34.37 21.58 24.04

(1) Proposed dividend submitted for approval by the Annual Shareholders’ Meeting of January 22, 2008.(2) Under article 93 of Law no.2003-1311, dividends distributed on or after January 1, 2005 are no longer entitled to tax credits.

The dividend will become payable as of February 4, 2008.

This dividend is eligible in full for the tax relief specifi ed in article 158-3 of the French General Tax Code on the terms applicable to income for the 2008 calendar year, where the recipient is an individual investor resident in France for tax purposes.

Regulated agreements (3rd resolution)The regulated agreements submitted to the Shareholders’ Meeting for approval are as follows:

Agreements contracted during fi scal 2007: On June 6, 2007, the Board of Directors approved a transfer of the shares in Excel (Sodexho Prestige). Sodexho Alliance SA transferred all its shares in Excel to Sofinsod, in exchange for Sofinsod SAS shares. Sofi nsod subsequently transferred all the shares in Excel to Loisirs Développements, in exchange for Loisirs Développements shares.

Agreement contracted in an earlier period remaining in effect during fi scal 2007:

On December 31, 1991, Bellon SA and Sodexho Alliance entered into a service agreement whereby Bellon SA

•

•

provides Sodexho Alliance and Sodexho Group companies with assistance and advice in areas such as strategy, fi nance, accounting and capital markets, directly or with qualifi ed experts. In return for these services, Bellon SA is paid a fee, the amount of which is approved annually by the Board of Directors of Sodexho Alliance in accordance with the relevant legal requirements.

The following are directors of both companies: Pierre Bellon, Rémi Baudin, Bernard Bellon, François-Xavier Bellon, Sophie Clamens, Nathalie Szabo and Astrid Bellon. Bellon SA invoiced a total of 6,526,800 euro (excluding VAT) to Sodexho Alliance under this agreement for fi scal 2007. In addition, a rider to this agreement specific to fiscal 2007 was signed on March 14, 2007, for an amount of 1,600,000 euro.

On September 13, 2005, Bellon SA and Michel Landel entered into an employment contract. Under its terms, Bellon SA undertook to make various payments to Michel Landel in the event of the termination of his contract over and above the termination payments to which he would be entitled under the law.

Bellon SA also agreed to enroll Michel Landel in the Sodexho Group executive retirement benefit plan, in addition to his compulsory retirement benefit entitlement. Contributions paid in respect of fi scal 2007 amounted to 128,664 euro.

•

•


Annual Shareholders’ Meeting 7.Report on the resolutions submitted to the 2008 Annual Shareholders’ Meeting

Purchase by the Company of its own shares (4th resolution)The Board of Directors is requesting the Shareholders’ Meeting to renew the authorization to purchase the Company’s own shares under articles L. 225-209 et seq. of the French Commercial Code.

This authorization would replace the previous authorization granted by the Shareholders’ Meeting on January 30, 2007.

It would allow for the implementation of a share repurchase program capped at 10% of the Company’s issued capital as of the date of the repurchase.

The features of the share repurchase program for which we are seeking your approval at the Shareholders’ Meeting of January 22, 2008 are as follows:

Maximum purchase price per share: 80 euroNumber of shares: 10% of the issued capitalwith an 18-month period of validity, subject to the limits stipulated in the relevant laws and regulations.

Shares may be acquired for the following purposes

1. market-making in the shares under a liquidity contract drawn up in accordance with the AFEI Code of Conduct as recognized by the Autorité des Marchés Financiers;

2. allotting shares to employees as part of employee profi t-sharing schemes, stock option plans or employee stock ownership plans;

3. allotting consideration-free shares to salaried employees or certain categories of salaried employees on the basis of their performance, under articles L. 225-197-1 et seq. of the French Commercial Code;

4. retention and subsequent use in connection with mergers and acquisitions;

5. cancellation by reduction in the issued capital.

Composition of the Board of Directors (5th to 10th resolutions)The terms of office as Director of Robert Baconnier, Paul Jeanbart, François Périgot, Peter Thompson, Mark Tompkins and Patricia Bellinger expire at the Shareholders’ Meeting of January 22, 2008.

The Board is proposing to the Shareholders’ Meeting, on the recommendation of the Nominating Committee, that Robert Baconnier, Paul Jeanbart, François Périgot, Peter Thompson, Mark Tompkins and Patricia Bellinger be re-elected to serve as Directors for a three-year term expiring at the end of the Shareholders’ Meeting held to adopt the fi nancial statements for the year ending August 31, 2010.

Directors’ fees (11th resolution)The Board is requesting the Shareholders’ Meeting to set the total amount of directors’ fees to be paid to the Board of Directors for fi scal 2008 at 530,000 euro, 12% higher than the amount for fi scal 2007.

Debt issues (12th resolution)The Board hereby reports to the Shareholders’ Meeting on the use it has made of the authorization to carry out one or more debt issues in the form of ordinary negotiable bonds up to a maximum aggregate amount of 2 billion euro. This authorization was used on March 15, 2007, when the Board of Directors carried out an issue of ordinary negotiable bonds of an amount of 500 million euro.

The Board of Directors is requesting the Shareholders’ Meeting to cancel the unused portion of said authorization. Consequently, the Board of Directors will have sole competence, subject to compliance with the law, to decide upon or authorize the issuance of bonds without limitation as to amount, with authority to sub-delegate to the Chief Executive Offi cer.


7. Annual Shareholders’ MeetingReport on the resolutions submitted to the 2008 Annual Shareholders’ Meeting

EXTRAORDINARY BUSINESSD

Change of legal name (13th resolution)The Board is proposing that the Shareholders’ Meeting change the legal name of the Company, simplifying the existing name (Sodexho Alliance) and adopting the new name:

Sodexo.

Authorization to increase the issued capital with pre-emptive rights, and by conversion of reserves (14th and 15th resolutions)The Board is requesting the Shareholders’ Meeting to renew the delegations of competence that were granted to the Board on January 31, 2006 to increase the Company’s permanent capital. No use has been made of these delegations during the last two fi scal years. These new authorizations would allow the Board of Directors to decide to increase the issued capital on one or more occasions by issuance of shares, warrants, and/or securities giving immediate or future access to shares of the Company, or by conversion of earnings, additional paid in capital, reserves or other items. Such issues could be made with pre-emptive rights and would be subject to the following limits:

the maximum aggregate par value of shares issued would be 64 million euro;

the maximum aggregate nominal value of debt securities issued would be 750 million euro.

In the case of conversion of reserves, additional paid in capital or earnings, no upper limit is set for the aggregate par value of the capital increase.

If approved, these delegations of competence, which would be valid for a period of 26 months, would allow the Board to act in the best interests of the Company by deciding, when the time is right, on the most appropriate means of increasing the Company’s permanent capital in light of the opportunities offered by the fi nancial markets.

Because any such issues are in the future, and because conditions in the national and international financial markets are liable to change, it is not possible at this stage to give precise fi gures on the dilution of each shareholder’s interest in the capital that might arise.

Consequently, the principal characteristics of the securities issued under the authorizations described above, and the terms on which they might give access to an interest in the

•

•

Company’s capital, will not be determined until the date of the decision to carry out the issue. As required by article 155-2 of the decree of March 23, 1967, a supplementary report would be issued at the appropriate time describing the fi nal terms of the proposed issues. This report would be made available to the shareholders within 15 days following the decision of the Board of Directors to carry out the issue, and would be brought to the attention of the next Shareholders’ Meeting to be held after the date of the decision by the Board of Directors (or the Chief Executive Offi cer acting under delegated powers) to carry out the issue.

In addition, the statutory auditors would issue a report on any such issue when the Board of Directors makes use of the delegation of competence.

Authorization to increase the issued capital under an international employee stock ownership plan (16th and 17th resolutions)In connection with the proposed launch of a new International Employee Stock Ownership Plan, and to comply with legal requirements in the countries involved, the Board of Directors is requesting the Shareholders’ Meeting to:

authorize the Board, for a period of 26 months, to increase the issued capital by issuing shares or securities to members of an employee stock ownership plan;

delegate competence to the Board, for a period of 18 months, to carry out an increase in the issued capital reserved for employees of the Sodexho Group.

These requests are subject to a limit of 2.5% of the issued capital. The price at which the benefi ciaries subscribe for shares would be set by the Board of Directors, but could not be more than 20% below the average of the opening quoted share prices for the twenty trading days preceding the decision setting the opening date of the subscription period.

Cancellation of shares (18th resolution)The Board is also requesting the Shareholders’ Meeting to renew the authorization to cancel, via a reduction in the issued capital, shares acquired under the Company’s share repurchase program; this authorization would be valid for a period of eighteen months.

•

•


Annual Shareholders’ Meeting 7.Report on the resolutions submitted to the 2008 Annual Shareholders’ Meeting

USE OF FINANCIAL AUTHORIZATIONSD

The financial authorizations granted to the Board of Directors by the Shareholders’ Meeting of January 31, 2006 or January 30, 2007 have been used on the following terms;

Increase or reduction in the Company’s issued capital:

As of the date of this Reference Document, the Board of Directors had not used any of the delegated powers granted by the Shareholders’ Meeting of January 30, 2007 to increase or reduce the issued capital of the Company;

Trading in the Company’s own shares:

Refer to the report on page 223 of this Reference Document for details of transactions by the Company in its own shares under the share repurchase program authorized by the Shareholders’ Meeting of January 30, 2007 and implemented by the Board of Directors at its meeting of January 30, 2007;

•

•

Granting of stock options:

As of the date of this Reference Document, the Board of Directors had not used the authorization granted by the Shareholders’ Meeting of January 31, 2006 to grant stock subscription options to Group employees.

Refer to page 82 of this Reference Document for details of stock purchase options granted to Group employees by the Board of Directors in Fiscal 2007 under the authorization granted by the Shareholders’ Meeting of January 31, 2006;

Consideration-free allotment of shares:

As of the date of this Reference Document, the Board of Directors had not used the authorization granted by the Shareholders’ Meeting of January 30, 2007 to allot consideration-free shares to Group employees.

•

•

Amendments to the bylaws (19 th and 20 th resolutions)The Board of Directors is asking the Shareholders’ Meeting to approve amendments to the bylaws in order to bring them into line with changes in the law. The proposed amendments are as follows:

1. amendment to certain paragraphs of article 16 of the bylaws relating to access to Shareholders’ Meetings and the deliberations of Shareholders’ Meetings.

These amendments will:

allow shareholders to participate in Shareholders’ Meetings if their right to do so has been substantiated by an accounting record being held of their shares at midnight (Paris time) on the third business day preceding the Meeting,

allow the Company to arrange for voting by remote transmission;

•

•

2. amendment to article 11 of the bylaws relating to the Board of Directors, in order to incorporate the new arrangements introduced by the law of December 30, 2006 on the election of one or more employee shareholder representatives to the Board of Directors.

This amendment will allow the Company to arrange for the election of a Director to represent the employees in the event that shares held by employees represent 3% or more of the issued capital.

Powers for the completion of formalities (21st resolution)This resolution will allow the necessary publication formalities to be completed after the Meeting.


7. Annual Shareholders’ MeetingResolutions for the Annual Shareholders’ meeting of January 22, 2008

Resolutions submitted to the Annual Shareholders’ meeting of January 22, 2008

ORDINARY BUSINESSD

First resolution(Adoption of the financial statements – Discharge to directors)

The Shareholders’ Meeting, having heard the reports of the Board of Directors and of the auditors, adopts the individual company financial statements for the year ended August 31, 2007 as presented by the Board of Directors, showing net income of €135,978,445.01, and the consolidated fi nancial statements for the year ended August 31, 2007, showing consolidated net income of €347 million.

The Shareholders’ Meeting discharges the directors from responsibility for their management for the year ended August 31, 2007.

Second resolution(Appropriation of earnings)

In accordance with the proposal made by the Board of Directors, the Shareholders’ Meeting resolves:

to appropriate net income for the year ended August 31, 2007 of: €135,978,445.01plus retained earnings as of the same date of: €579,872,810.60 making a total of: €715,851,255.61as follows:

- net dividend €182,880,374.95 - retained earnings €532,970,880.66Total € 715,851,255.61

Consequently, each share qualifying for dividend will receive a net dividend of €1.15:

giving entitlement to the tax relief specified in article 158-3 of the French General Tax Code on the terms applicable to income for the 2007 calendar year, where the recipient is an individual investor liable to personal income tax in France;

•

not giving entitlement to this tax relief in all other cases.

If the Company holds any of its own shares as of this date, the amount of dividend corresponding to these shares will not be paid, and will be appropriated to retained earnings.

The dividend will be payable from February 4, 2008.

Dividends paid by the Company in respect of the last three fi scal years were as follows:


Number of qualifying shares 159,026,413 159,026,413 159,026,413

Net dividend (euros) 0.95 0.75 0.70

Third resolution(Approval of regulated agreements)

The Shareholders’ Meeting, having heard the auditors’ special report on related-party agreements regulated by article L 225-38 of the French Commercial Code, approves said report and agreements.

Fourth resolution(Purchase by the Company of its own shares)

The Shareholders’ Meeting, having heard the report of the Board of Directors, authorizes the Board of Directors and any duly authorized representative of the Board, in accordance with articles L. 225-209 et seq. of the French Commercial Code, for a period of eighteen months, to arrange for the repurchase by the Company of its own shares.

•

•


Annual Shareholders’ Meeting 7.Resolutions for the Annual Shareholders’ meeting of January 22, 2008

This authorization is designed to allow the Company to:

carry out market-making in the shares under a liquidity contract drawn up in accordance with the AFEI Code of Conduct as recognized by the Autorité des Marchés Financiers;

allot shares to employees on the terms and conditions permitted by law, in particular as part of employee profi t-sharing schemes, stock option plans or employee stock ownership plans;

allot consideration-free shares to salaried employees or certain categories of salaried employees on the basis of their performance, as permitted under articles L. 225-197-1 et seq. of the French Commercial Code;

purchase shares for retention and subsequent use in connection with mergers and acquisitions;

cancel the shares by reducing the issued capital.

These transactions may be effected by any method on the stock market or over-the-counter, including by means of derivatives. There is no limitation on the use of block trades to purchase or transfer shares under this authorization.

These transactions may take place at any time subject to the limits imposed by laws and regulations in force at the time.

The Shareholders’ Meeting resolves that the number of shares acquired under the present resolution may not exceed 10% of the Company’s issued capital, currently 15,902,641 shares, it being stipulated that for the purposes of the present authorization, the number of treasury shares must be taken into account such that the Company at no time owns more than 10% of its own shares.

The Shareholders’ Meeting resolves that the total amount spent on such purchases may not exceed 750 million euro.

The Shareholders’ Meeting resolves that the purchase price may not exceed 80 euro per share, subject to any adjustments required in the event of transactions involving the Company’s capital.

Full powers are given to the Board of Directors and any duly authorized representative of the Board to act on this authorization by:

placing stock market orders, and entering into agreements, in particular for the keeping of share purchase and sale registers;

making fi lings and completing other formalities and generally doing all that is necessary.

This authorization cancels and replaces all previous authorizations to the same effect, in particular that granted in the fourth resolution of the Annual Shareholders’ Meeting of January 30, 2007.

•

•

•

•

•

•

•

Fifth resolution(Re-election of Robert Baconnier as director)

The Shareholders’ Meeting re-elects Robert Baconnier, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the financial statements for the year ending August 31, 2010.

Sixth resolution(Re-election of Patricia Bellinger as director)

The Shareholders’ Meeting re-elects Patricia Bellinger, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the financial statements for the year ending August 31, 2010.

Seventh resolution(Re-election of Paul Jeanbart as director)

The Shareholders’ Meeting re-elects Paul Jeanbart, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the fi nancial statements for the year ending August 31, 2010.

Eighth resolution(Re-election of François Périgot as director)

The Shareholders’ Meeting re-elects François Périgot, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the financial statements for the year ending August 31, 2010.

Ninth resolution(Re-election of Peter Thompson as director)

The Shareholders’ Meeting re-elects Peter Thompson, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the financial statements for the year ending August 31, 2010.



Tenth resolution(Re-election of Mark Tompkins as director)

The Shareholders’ Meeting re-elects Mark Tompkins, whose term of offi ce has expired, to serve as director for a three-year term expiring at the end of the Annual Shareholders’ Meeting held to adopt the financial statements for the year ending August 31, 2010.

Eleventh resolution(Directors’ fees for fi scal 2008)

The Shareholders’ Meeting sets at €530,000 the total amount of directors’ fees to be paid for the year ending August 31, 2008.

Twelfth resolution(Voidance of unused portion of authorization to issue bonds)

The Shareholders’ Meeting notes that the Board of Directors, using the authorization granted by the twelfth resolution of the Annual Shareholders’ Meeting of January 30, 2007 up to a maximum of €2 billion, carried out an issue of ordinary bonds of a total amount of €500 million on March 15, 2007.

The Shareholders’ Meeting resolves to void the unused portion of said authorization as granted by the Annual Shareholders’ Meeting of January 30, 2007. Consequently, the Board of Directors shall henceforth have sole competence, subject to compliance with the law, to decide upon or authorize the issuance of bonds without limitation as to amount, with authority to sub-delegate to the Chief Executive Offi cer.

EXTRAORDINARY BUSINESSD

Thirteenth resolution(Change of legal name)

The Shareholders’ Meeting, having heard the report of the Board of Directors, resolves to simplify the current legal name of the Company and to adopt as the new legal name:

“Sodexo”

Consequently, the Shareholders’ Meeting resolves that Article 3 of the bylaws shall henceforth read as follows:

“Article 3 – Legal name

The legal name of the Company is: Sodexo”

Fourteenth resolution(Delegation of competence to the Board of Directors to proceed with capital increases by the issuance, with pre-emptive rights maintained, of ordinary shares and/or other securities giving access to the capital or entitlement to debt securities)

The Shareholders’ Meeting, having reviewed the report of the Board of Directors and the auditors’ special report, and in accordance with articles L. 225-129, L. 225-129-2 and L. 228-92 of the French Commercial Code, having noted that the issued capital is fully paid:

1. delegates to the Board of Directors competence to proceed with, on one or more occasions, to the extent and at the times that it sees fi t:

the issuance in France or abroad, in euro or any other currency or currency unit established by reference to more than one currency, with pre-emptive rights maintained, of ordinary shares and/or any other securities, including stand-alone share subscription

•

warrants or share purchase warrants, giving immediate or future access at any time or on a fi xed date to the Company’s capital or to debt securities, by subscription in cash or by offset of debts, conversion, exchange, redemption, presentation of a warrant or any other means, any debt securities being issuable with or without guarantees in the form, at the rate and on the terms that the Board of Directors sees fi t;

it being stipulated that the issuance of preferred shares is excluded from the present delegation;

2. sets the period of validity of the present delegation at twenty-six (26) months from the date of the present Shareholders’ Meeting;

3. resolves that in the event that the Board of Directors makes use of the present delegation:

the maximum aggregate par value of immediate or future capital increases carried out as a result of the issuance of shares or securities referred to in paragraph 1 above is set at 64 million euro, it being specifi ed that any immediate or future capital increase arising under the terms of the seventeenth resolution of the present Shareholders’ Meeting shall also count towards this limit,

this upper limit will be raised as appropriate by the aggregate par value of any additional shares that may be issued, in the event of new transactions affecting the Company’s capital, in order to protect, in accordance with the law, the rights of holders of securities giving future access to the capital,

further, that the aggregate nominal value of debt securities of the Company whether or not giving access to the capital may not exceed 750 million euro or the equivalent thereof as of this day in any other currency or currency unit established by reference to more than one currency, it being specifi ed that the nominal value of any debt securities issued

•

•

•



under the terms of the seventeenth resolution of the present Shareholders’ Meeting shall also count towards this limit;

4. resolves that in the event that the present delegation of competence is used:

the shareholders shall have irreducible pre-emptive rights to subscribe to the issue(s) in proportion to the number of shares held by each at the time, although the Board may at its discretion grant reducible subscription rights,

if the entire issue is not absorbed by irreducible and reducible subscriptions, the Board of Directors may, subject to compliance with the law, use any or all of the means specifi ed in article L. 225-134 of the French Commercial Code in the order it sees fi t, including offering some or all of the unsubscribed shares and/or securities to the public or limiting the amount of the issue to the amount of subscriptions actually received, provided that at least three-quarters of the issue has been subscribed;

5. formally records that in the event that the present delegation of competence is used, the decision to issue securities giving access to the capital shall entail express waiver by the shareholders of their pre-emptive rights over the shares to which such securities give entitlement, in favor of the holders of those securities;

6. formally records that the present delegation of competence grants full powers to the Board of Directors, with authority to delegate to the Chief Executive Offi cer or with the agreement of the Chief Executive Offi cer, to implement the present delegation subject to compliance with the law, and in particular to:

decide upon the capital increase and the number of securities to be issued,

determine the amount of the issue, the issue price, and any issue premium,

determine the date and terms of the issue, the nature and characteristics of the securities to be issued, and further to decide, in the case of bonds or other debt securities giving access to the capital of the Company, whether they are to be subordinated (and if so, the ranking of subordination, in accordance with article L. 228-97 of the French Commercial Code), to set the rate of interest (in particular fi xed, fl oating, zero-coupon or index-linked), the term (fi xed or perpetual) and the other terms of issue (including the granting of guarantees or collateral) and repayment (including redemption by delivery of Company assets); such securities may have warrants attached that give entitlement to the allotment, purchase or subscription of bonds or other debt securities or may take the form of complex bonds as defi ned by the stock market authorities (for example, because of the terms of redemption or remuneration or because of other rights such as index-linking or option rights), and to amend the aforementioned terms during the life of such securities subject to compliance with the relevant formalities,

•

•

•

•

•

determine the method used to pay for the shares and/or securities hereby issued,

determine as necessary terms for the exercise of rights attached to the shares or securities giving access to the capital hereby issued and in particular to determine the date, which may be retroactive, from which the new shares will rank for dividend and other rights, and determine the terms of exercise of any rights to conversion, exchange or redemption (including by delivery of Company assets such as shares or securities already issued by the Company), along with all other terms and conditions of the capital increase,

determine the terms under which the Company may purchase or exchange on the stock market, at any time or during pre-determined periods, the securities hereby issued, with a view to their cancellation or retention, subject to compliance with the law,

at its discretion, suspend the exercise of the rights attached to these securities for up to three months,

at its sole discretion, offset the cost of capital increases against the additional paid in capital arising thereon, and deduct from such additional paid in capital any sums required to increase the legal reserve to one-tenth of the new issued capital following each capital increase,

determine and make any adjustments needed to take account of the effect of transactions affecting the capital of the Company, in particular a change in the par value of the shares, an increase in the capital by conversion of reserves, consideration-free allotment of shares, stock split or reverse stock split, distribution of reserves or other assets, redemption of capital, or any other equity transaction, and determine any arrangements for protecting the holders of securities giving access to the capital,

formally record the completion of each capital increase and arrange for the bylaws to be amended accordingly,

enter into agreements, take measures and complete all formalities necessary for the issuance and servicing of securities issued under the present delegation and the exercise of any rights attached thereto;

7. formally records that in the event that the Board of Directors uses the delegation of competence granted to it by the present resolution, the Board of Directors will report to the subsequent Ordinary Shareholders’ Meeting on the use made of the authorizations granted in the present resolution, in accordance with the relevant laws and regulations;

8. formally records that the present delegation voids any unused portion of any prior delegation relating to the issuance, with pre-emptive rights maintained, of securities giving immediate or future access to an interest in the Company’s capital.

•

•

•

•

•

•

•

•



Fifteenth resolution(Delegation of competence to the Board of Directors to increase the capital by conversion of reserves)

The Shareholders’ Meeting, voting under the quorum and majority conditions required for ordinary business, having reviewed the report of the Board of Directors, and in accordance with the French Commercial Code:

1. delegates to the Board of Directors competence to proceed with, on one or more occasions and to the extent and at the times it sees fi t, the conversion into capital of some or all of such earnings, reserves or additional paid in capital that may legitimately be converted into capital by law or under the bylaws, in the form of the allotment of consideration-free ordinary shares or an increase in the par value of existing shares;

2. sets the period of validity of the present delegation at twenty-six (26) months from the date of the present Shareholders’ Meeting;

3. formally records that the present delegation of competence gives full powers to the Board of Directors, with authority to delegate to the Chief Executive Offi cer or with the agreement of the Chief Executive Offi cer to a Chief Operating Offi cer, to implement the present delegation subject to compliance with the law, and in particular to:

determine the amount and nature of the reserves to be converted into capital, determine the number of new shares to be issued and/or the amount by which the par value of the existing shares comprising the issued capital will be increased, determine the date, which may be retroactive, from which the new shares will rank for dividend and other rights or the increase in par value will become effective,

decide that fractional rights shall not be negotiable and that the corresponding shares shall be sold, the proceeds of the sale being divided among the rights-holders,

formally record the completion of each capital increase and arrange for the bylaws to be amended accordingly, and generally do all that is useful and necessary in compliance with the applicable laws and regulations;

4. formally records that in the event that the Board of Directors uses the delegation of competence granted to it by the present resolution, the Board of Directors will report to the subsequent Ordinary Shareholders’ Meeting on the use made of the authorizations granted in the present resolution, in accordance with the relevant laws and regulations.

Sixteenth resolution(Authorization to the Board of Directors to proceed with increases in the issued capital by issuance of shares or securities giving access to the Company’s capital with cancellation of pre-emptive rights in favor of members of an employee stock ownership plan)

•

•

•

The Shareholders’ Meeting, having reviewed the report of the Board of Directors and the auditors’ special report, pursuant to articles L. 443-1 et seq of the French Labor Code and article L. 335-138-1 of the French Commercial Code, and in accordance with article L. 225-129-6 of the French Commercial Code:

1. authorizes the Board of Directors to increase the issued capital of the Company on one or more occasions by the issuance of shares or of securities giving access to the Company’s capital reserved for the members of an employee stock ownership plan of the Company or of French or foreign entities that are related to the Company within the meaning of article L. 225-180 of the French Commercial Code and article L. 444-3 of the French Labor Code;

2. resolves that the subscription price(s) will be determined by the Board of Directors in compliance with article L. 443-5 of the French Labor Code, by applying a discount of no more than 20% of the average of the opening quoted share prices for the twenty trading days preceding the decision setting the opening date of the subscription period.

Expressly authorizes the Board of Directors to reduce or cancel said discount as it sees fi t, in particular to take account of legal, accounting, tax and welfare regimes applicable in the countries of residence of the employee stock ownership plan members benefi ting from the capital increase;

3. resolves pursuant to article L. 443-5 of the French Labor Code that the Board of Directors may also decide to allot, free of consideration, existing or new shares in the Company or existing or new securities giving access to the Company’s capital, to cover the employer’s plan contribution and/or the discount, provided that the equivalent monetary value thereof valued at the subscription price does not have the effect of breaching the limits specifi ed in articles L. 443-5 and L. 443-7 of the French Labor Code and that the characteristics of the securities giving access to the Company’s capital are determined by the Board of Directors in compliance with the applicable regulations;

4. resolves to cancel the pre-emptive rights of shareholders in respect of the new shares or other securities giving access to the Company’s capital and of the securities to which the securities issued under the present resolution would give entitlement in favor of the members of an employee stock ownership plan;

5. resolves that the Board of Directors shall have full powers, with authority to delegate or sub-delegate, in accordance with the applicable laws and regulations, to implement the present resolution and in particular to decide the terms and conditions of the transactions and determine the dates and terms of the issues carried out under the present authorization, set the opening and closing dates of subscriptions, the dates from which the shares will be entitled to dividend and other rights, the arrangements for payment for the shares and any deferral of such payment, to request the admission of the shares hereby issued to listing on a stock exchange wherever it sees fi t, to formally



record the completion of the capital increases to refl ect the quantity of shares actually subscribed, to carry out directly or via an intermediary all transactions and formalities associated with the capital increases and, if it sees fi t, offset the cost of the capital increases against the additional paid in capital arising thereon and deduct from such additional paid in capital any sums required to increase the legal reserve to one-tenth of the new issued capital following each capital increase;

6. resolves that the maximum aggregate par value of capital increases made pursuant to the present resolution may not exceed 2.5% of the Company’s issued capital as of the date of the decision of the Board of Directors to carry out the capital increase, this limit to be raised by the required number of shares to refl ect any adjustments made in compliance with the applicable laws and regulations and with any contractual provisions in order to protect the rights of holders of securities giving access to the Company’s shares.

The authorization hereby granted to the Board of Directors is valid for a period of 26 months from the date of the present Shareholders’ Meeting.

Seventeenth resolution(Delegation by the Shareholders’ Meeting to the Board of Directors of competence to proceed with increases in the issued capital, with cancellation of pre-emptive rights, reserved for certain categories of benefi ciaries)

The Shareholders’ Meeting, having reviewed the report of the Board of Directors and the auditors’ special report, in accordance with articles L. 225-129 et seq and L. 225-138 of the French Commercial Code:

1. delegates to the Board of Directors competence to decide to increase the issued capital, on one or more occasions and to the extent and at the times it sees fi t, by issuance of shares or any other securities giving immediate or future access to the Company’s capital, such issues to be reserved for persons meeting the criteria for one or more of the categories described below;

2. resolves that the maximum aggregate par value of capital increases made pursuant to the present resolution may not exceed 2.5% of the Company’s issued capital as of the date of the decision of the Board of Directors to carry out the capital increase, this limit to be raised by the required number of shares to refl ect any adjustments made in compliance with the applicable laws and regulations and with any contractual provisions in order to protect the rights of holders of securities giving access to the Company’s shares. The maximum aggregate par value of capital increases made pursuant to the present resolution will count towards the overall limit specifi ed in paragraph 3 of the fourteenth resolution of the present Shareholders’ Meeting;

3. resolves to cancel pre-emptive rights to the shares or securities, and to the securities to which said securities may give entitlement, that may be issued pursuant to the present resolution, and to reserve the right to subscribe thereto to categories of benefi ciaries meeting the following criteria: (i) employees and offi cers of Sodexho Alliance Group companies that are related to the Company within the meaning of article L. 225-180 of the French Commercial Code and article L. 444-3 of the French Labor Code and which have their registered office outside France; (ii) and/or employee stock ownership funds or other entities with or without legal personality which are invested in securities issued by the company and of which the unit-holders or shareholders comprise the persons defi ned in item (i) of the present paragraph; (iii) and/or any bank or bank subsidiary acting on behalf of the Company in connection with the implementation of a stock ownership plan or similar plan in favor of the persons defi ned in item (i) of the present paragraph to the extent that subscription by the person authorized under the present resolution would enable the employees of subsidiaries located outside France to benefit from employee stock ownership plans and similar plans on terms that would confer an equivalent economic benefi t to that accruing to the other employees of the Sodexho Alliance Group;

4. resolves that the subscription price(s) will be determined by the Board of Directors in compliance with article L. 443-5 of the French Labor Code, by applying a discount of no more than 20% of the average of the opening quoted share prices for the twenty trading days preceding the decision setting the opening date of the subscription period.

Expressly authorizes the Board of Directors to reduce or cancel said discount as it sees fi t, in particular to take account of legal, accounting, tax and welfare regimes applicable in the country of residence of the employee stock ownership plan members benefi ting from the capital increase;

5. resolves that the Board of Directors shall, subject to the terms of the bylaws, have full powers, with authority to sub-delegate as permitted by the law, to implement the present delegation, arrange for the issue of the shares, and amend the bylaws accordingly.

The Board of Directors will report to the subsequent Ordinary Shareholders’ Meeting on the use made of the delegation of competence granted in the present resolution, in accordance with the relevant laws and regulations.

The delegation hereby made to the Board of Directors is valid for a period of eighteen months from the date of the present Shareholders’ Meeting.



Eighteenth resolution(Authorization for the Board of Directors to reduce the issued capital by cancellation of shares)

The Shareholders’ Meeting, having reviewed the report of the Board of Directors and the auditors’ special report, resolves:

1. to authorize the Board, in accordance with L. 225-209 of the French Commercial Code and subject to adoption by the Shareholders’ Meeting of the fourth resolution, to cancel on one or more occasions the shares acquired by the Company pursuant to the authorization granted by the fourth resolution of the present Shareholders’ Meeting under ordinary business up to a maximum of 10% of the issued capital of the Company per twenty-four month period and to reduce the issued capital accordingly;

2. to authorize the Board of Directors, with authority to sub-delegate, to carry out such reductions in the issued capital, set the terms and formally record completion thereof, amend the bylaws accordingly, complete all formalities, measures and fi lings with all relevant bodies and generally do all that is necessary.

The present authorization is granted for a period of eighteen months from the date of the present Shareholders’ Meeting.

This authorization cancels and replaces any previous delegation of the same type, and specifi cally that granted in the fi fteenth resolution of the Annual Shareholders’ Meeting of January 30, 2007.

Nineteenth resolution(Harmonization of article 16 of the bylaws with the provisions of the decrees of May 3, 2002 and December 11, 2006)

The Shareholders’ Meeting, having reviewed the report of the Board of Directors, resolves to harmonize the provisions of the bylaws relating to remote voting and access to meetings with decree no.2002-803 of May 3, 2002 and decree no.2006-1566 of December 11, 2006, and to amend paragraphs 1 and 2 of article 16 of the bylaws accordingly, as indicated below:

Article 16 – Shareholders’ Meetings

The second paragraph of item 1 of this article shall henceforth read as follows:

“For the purposes of calculating quorum and majority at Shareholders’ Meetings, shareholders taking part in said meetings via video-conferencing or electronic telecommunications links enabling them to be identifi ed in accordance with the defi nitions and conditions relating to such links as stipulated in the relevant laws or regulations are deemed to have attended the meeting.”

Item 2 of this article shall henceforth read as follows:

“Shareholders’ Meetings comprise all shareholders who have paid in full all amounts due in respect of their shares and whose right to participate in Shareholders’ Meetings has been substantiated by an accounting record being held of their shares either in the name of the shareholder or, if the shareholder is not resident in France, of the shareholder’s approved intermediary, at midnight (Paris time) on the third business day preceding the Meeting.

An accounting record of the shares is a record existing either in the nominative share registers kept by the company or by the approved intermediary, or in the bearer share accounts kept by the approved intermediary, that satisfi es the time constraint specifi ed in the previous paragraph.

Access to Shareholders’ Meetings is open to members on presentation of proof of status and identity. The Board of Directors may if it sees fi t arrange for shareholders to be supplied with individual entry passes in their names, and require these passes to be produced.

Any shareholder may vote remotely, in compliance with the applicable law and regulations. Similarly, any shareholder may during the course of a meeting participate in discussions and vote by remote transmission.”

The remainder of the article is unchanged.


Annual Shareholders’ Meeting 7.Statutory auditors’ special reports

Twentieth resolution(Modification of article 11 of the bylaws in relation with the provisions introduced by the law of December 30, 2006 on the election of one or more employee shareholder representatives to the Board of Directors)

The Shareholders’ Meeting, having heard the report of the Board of Directors, resolves to supplement the bylaws by incorporating the new arrangements introduced by the law of December 30, 2006 on the election of one or more employee shareholder representatives to the Board of Directors.

Consequently, the Shareholders’ Meeting resolves to insert a new paragraph at the end of article 11 of the bylaws, to read as follows:

“If the report presented by the Board of Directors pursuant to article L. 225-102 of the French Commercial Code establishes that shares held by employees of the Company and employees of related companies within the meaning of article L. 225-180 of said Code represent more than 3% of the Company’s capital, a Director shall be elected by the Shareholders’ Meeting on the recommendation of the employee shareholders.

The terms for the selection of candidates are as follows:

if the voting right attached to shares owned by employees is exercised by the members of the Supervisory Board of an employee stock ownership fund, the candidates shall be selected by said Board.

If the voting right attached to shares owned by employees is exercised by the employees themselves, the candidates shall be selected by the consultation process described below. Only candidates nominated by a group of shareholders representing at least 5% of the shares held directly by employees shall be eligible;

At least two months before the Shareholders’ Meeting, the Board of Directors shall invite the employees and/or members of the Supervisory Board of the employee stock ownership fund(s) to submit candidates. To this end, the Chairman of the Board of Directors shall arrange for the employee shareholders to be consulted by letter with a view to the selection of candidates. The employee shareholders have fifteen days from the date of the letter in which to reply.

A report shall be prepared on this process, specifying the number of votes cast for each candidate. A list of all validly selected candidates shall be prepared and communicated to the Board of Directors.”

•

•

Twenty-fi rst resolution(Powers)

The Shareholders’ Meeting confers full powers on the bearer of a copy or extract of the minutes of the present Shareholders’ Meeting to carry out all necessary formalities.


7. Annual Shareholders’ MeetingStatutory auditors’ special reports

SPECIAL REPORT OF THE STATUTORY AUDITORS ON THE ISSUANCE OF SHARES AND/OR VARIOUS SECURITIES

(Ordinary and Extraordinary Shareholders’ Meeting of January 22, 2008: 14th resolution)

SODEXHO ALLIANCE S.A. 3, avenue Newton78180 Montigny-le-Bretonneux

D






In our capacity as statutory auditors of your Company and in accordance with the terms of our engagement pursuant to the French Commercial Code (Code de Commerce) and notably Articles L. 225-129-2, L. 225-135 and L. 228-92, we hereby submit our report on the proposed issue of shares and/or various securities, on which you are being asked to deliberate and vote.

The Board of Directors proposes, on the basis of their report, that he be empowered to determine the terms and conditions of this operation for a period of 26 months and where necessary to waive your preferential subscription rights.

The 14th resolution provides for the issues, with retention of preferential subscription rights, of shares in the Company and/or various securities that grant immediate or deferred access to your Company’s share capital.

The principal amount of immediate or future capital increases carried out by virtue of the aforementioned authorization may not exceed 64 million euros, it being understood that this authorization shall be included in and may not exceed the principal amount of shares that will be granted by virtue of the 14th and 17th resolutions. The principal amount of the debt securities to be issued may not exceed 750 million euros, it being understood that this authorization shall be included in and may not exceed the

amount of debt securities that will be granted by virtue of the 14th and 17th resolutions.

In accordance with Articles R. 225-113, R. 225-114 and R. 225-117 of the French Commercial Code, the Board of Directors has to prepare a report. We are required to comment on the conformity of the fi nancial data with the financial statements and on other information in connection with the issues concerned in this report.

We performed the procedures that we deemed necessary in accordance with the professional standards set down by the French Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux Comptes). Those procedures consisted of reviewing the content of the Board of Directors’ report and the methods used for determining the issue price for each issue.

Since the terms and conditions of the issue price of the equity securities to be issued by virtue of the 14th and 17th resolutions have not been stated in this report, we are not in a position to, and do not comment on the fi nal terms and conditions under which these issues will be conducted.

In accordance with Article R. 225-116 of the Commercial Code, we will submit a supplementary report when an issuance of various securities that grants immediate or deferred access to a share in your Company’s capital is made by your Board of Directors.

This is a free translation into English of the Statutory Auditor’s special report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.



SPECIAL REPORT OF THE STATUTORY AUDITORS ON EMPLOYEE SHARE ISSUES



D






In our capacity as Statutory Auditors of Sodexho Alliance S.A. and as required by Articles L. 225-135 et seq. of the French Commercial Code (Code de commerce), we hereby present our report on the planned issuance of shares to employees of the Company and its affi liates within the meaning of Article L. 225-180 of the Commercial Code, without pre-emptive subscription rights for existing shareholders.

Shareholder approval is required for such issues pursuant to Article L. 225-129-6 of the Commercial Code and Article L. 443-5 of the French Labor Code (Code du travail).

As described in its report, the Board of Directors is seeking a 26-month authorization to carry out such issues and to set the terms and conditions thereof. Shareholders are also asked to waive their pre-emptive right to subscribe for the shares to be issued to employees.

The total nominal amount of any capital increases resulting from such employee share issues may not exceed 2.5% of the Company’s capital.

The Board of Directors is responsible for drawing up a report in compliance with Articles R. 225-113 and R. 225-114 of the Commercial Code. Our responsibility is to express an opinion on the fairness of the fi nancial information taken from the fi nancial statements, on the proposal to waive shareholders’ pre-emptive subscription

rights and on certain other information about such issues given in the Board’s report.

We performed the procedures that we deemed necessary in accordance with the professional standards set down by the French Institute of Statutory Auditors (Compagnie nationale des commissaires aux comptes). Those procedures consisted of reviewing the content of the Board of Director’s report relating to employee share issues, as well as the methods used for determining the issue price of the shares concerned.

Subject to the future examination of the terms and conditions of these issues, we have no comment to make on the methods used to determine the issue price of said shares, as presented in the report of the Board of Directors.

As the price of any shares issued will be determined by the Board of Directors when the operations are carried out, we are not in a position to comment on the fi nal terms and conditions under which these issues will be conducted, nor, in consequence, on the proposed waiver of shareholders’ pre-emptive rights to subscribe for the issues concerned.

In accordance with Article R. 225-116 of the Commercial Code, we will draw up a supplementary report at the time of each such issue conducted by the Board of Directors.



7. Annual Shareholders’ MeetingStatutory auditors’ special reports

SPECIAL REPORT OF THE STATUTORY AUDITORS ON THE ISSUANCE OF SHARES AND SHARE EQUIVALENTS (WITHOUT PRE-EMPTIVE SUBSCRIPTION RIGHTS FOR EXISTING SHAREHOLDERS)



D






In our capacity as Statutory Auditors of Sodexho Alliance S.A., and in accordance with Articles L. 228-92 and L. 225-138 of the French Commercial Code (Code de Commerce), we present below our report on the authorizations sought by the Board of Directors to issue shares and/or share equivalents to certain categories of people as defi ned in the report of the Board of Directors.

As described in its report, the Board of Directors is seeking an 18-month authorization to carry out such issues and to set the terms and conditions thereof. Where applicable, shareholders are also asked to waive their pre-emptive right to subscribe for the securities concerned.

The total nominal amount of any capital increases resulting from such shares issues may not exceed 2.5% of the Company’s capital which will impact the amount of the maximum increase as defi ned under the fourteenth resolution.

We performed the procedures that we deemed necessary in accordance with the professional standards set down

by the French Institute of Statutory Auditors (Compagnie nationale des commissaires aux comptes). Those procedures consisted of reviewing the methods used for determining the issue price for each issue.

Subject to the future examination of the terms and conditions of these issues, we have no comment to make on the methods used to determine the issue price of the securities concerned, as presented in the report of the Board of Directors.

As the price of the securities issued will be determined by the Board of Directors when the operations are carried out, we are not in a position to comment on the fi nal terms and conditions under which these issues will be conducted, nor, in consequence, on the proposed waiver of shareholders’ pre-emptive rights to subscribe for the issues concerned, the principle of which is in keeping with the nature of the proposed operations.

In accordance with Article R. 225-116 of the Commercial Code, we will draw up a supplementary report at the time of each such issue conducted by the Board of Directors.




SPECIAL REPORT OF THE STATUTORY AUDITORS ON A SHARE CAPITAL REDUCTION THROUGH THE CANCELLATION OF PURCHASED SHARES

(Ordinary and Extraordinary Meeting of Shareholders held on January 22, 2008 – 18th resolution)


D






In our capacity as statutory auditors of Sodexho Alliance, and in accordance with the terms of our engagement set forth in Article L. 225-209, paragraph 7 of the French Commercial Code (Code de Commerce), in the event of a share capital reduction through the cancellation of purchased shares, we hereby submit our report containing our assessment of the reasons for, and the terms and conditions of the proposed capital reduction.

We performed our procedures in accordance with the professional standards set down by the French Institute of Statutory Auditors (Compagnie nationale des commissaires aux comptes). Those standards require us to perform procedures to assess whether the reasons for, and the terms and conditions of, the proposed capital reduction are legitimate and lawful.

This transaction is to be carried out in connection with the repurchase by your Company of its own shares pursuant to the provisions of Article L. 255-209 of the French Commercial Code (Code de Commerce), limited to 10%

of the Company’s capital. This purchase authorization is submitted for your approval in the 4th resolution and would be given for a period of 18 months.

Your Board of Directors requests that you grant it full authority for a period of 18 months, within the context of the authorization for your Company to purchase its own shares, to cancel the shares of stock purchased, within the limit of 10% of the stated capital of its Company in any given 24-month period.

We have no matters to report on the reasons for, or the terms and conditions of, the aforementioned proposed capital reduction. We remind you that this capital reduction is subject to prior shareholder consent to the repurchase by your Company of its own shares.




8. Glossary

ADRClient Retention RateCOSOGroup net incomeIntensity riskIssued volumeNumber of sitesOrganic GrowthWork-related accident frequency rateWork-related accident severity rating


8. Glossary

ADRAbbreviation for “American Depositary Receipt”. An ADR is a registered certifi cate issued by an American bank to represent ownership of a share or bond issued by a publicly-traded non-American company. ADRs are quoted in US dollars, but the underlying shares or bonds are denominated in their original currency and are held in deposit by a bank, known as the custodian, in the country of issue. ADRs enable a non-American company, subject to certain conditions, to be quoted in the United States. One Sodexho Alliance share is represented by one Sodexho Alliance ADR. Dividends and voting rights belong to the ADR holder.

Client Retention RateThe client retention rate equals prior-period revenues from contracts lost by Sodexho (to rivals or due to a decision not to outsource) divided by total prior-period revenues for the entity in question. Also included are contracts terminated by Sodexho, and site closures (including the effect of relocations).

This is a comprehensive retention rate. Other companies may calculate their retention rates on a different basis.

COSOCOSO was formed in the United States in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private sector initiative jointly sponsored by major professional associations chaired by James C. Treadway. COSO issued recommendations to public companies and independent accountants in the form of an integrated framework for internal control, which forms the basis for the application of certain provisions of the Sarbanes-Oxley Act.

Group net incomeGroup net income is total net income generated by all Group companies minus the portion of net income attributable to minority investors in subsidiaries not wholly owned by Sodexho.

Intensity riskRisks which due to their frequency and gravity must be transferred to the insurance market.

Issued volumeThe face value of vouchers and cards multiplied by the number of vouchers and cards issued.

Number of sitesThe number of sites corresponds to the number of client locations in the Group.

Organic GrowthOrganic growth is the increase of revenues, at constant exchange rates, and excluding the impact of acquisitions or divestitures of subsidiaries for a twelve month period.

Work-related accident frequency rateNumber of accidents per million hours worked.

Work-related accident severity ratingNumber of days’ work lost due to work-related accidents per million hours worked.

Glossary


9. Responsibility for the Reference Document and the Audit of the Financial Statements

Responsibility for the Document de Référence (French-language equivalent of the Reference Document) 248

Responsibility for the audit of the Financial Statements 248


9. Responsibility for the Reference Document and the Audit of the Financial Statements

Responsibility for the Document de Référence (French-language equivalent of the Reference Document)“Having taken all reasonable precautions, I hereby declare that the information contained in this Document de Référence is to the best of my knowledge in accordance with reality and that nothing has been omitted that would alter its impact.

I declare that to the best of my knowledge the financial statements comply with the applicable accounding standards and present a true statement of the interests, the financial position, and of the income of the company, and of the consolidated entities.

The Management Report described in page 252 presents a true picture of the evolution of the business, of the results and the financial position of the company and of the consolidated entities, as well as a description of the principal risks for the Group.

I have obtained from our statutory auditors an engagement completion letter in which they declare that they have verified the information relating to the financial position and the financial statemets which are presented in this document and that they have read this document in its entirety.

The Chief Executive OfficerMichel Landel

Responsibility for the audit of the Financial StatementsAuditors First appointed

Term of offi ce Term of offi ce expires

Principal auditors

PricewaterhouseCoopers Audit 63, rue de Villiers92208 Neuilly sur Seine, FranceRegistered no. RCS Nanterre 672 006 483Represented by Louis-Pierre Schneider February 22, 1994 6 years

Annual Shareholders’ Meeting held in 2011 to adopt the fi nancial

statements for fi scal 2010

KPMG Audit, departement de KPMG S.A.Immeuble le Palatin3, cours du Triangle92923 Paris La Defense CEDEX, FranceRegistered no. 775 726 417Represented by Patrick-Hubert Petit February 4, 2003 6 years



Alternate auditors

Patrick Frotiée 63, rue de Villiers92208 Neuilly sur Seine, France February 25, 1997 6 years



Didier Thibaut De Menonville2 bis, rue de Villiers92309 Levallois-Perret Cedex, France February 4, 2003 6 years




10. Reconciliation table

To facilitate the reading of this document, the reconciliation table below identifi es:

The main headings required by European Regulation 809/2004, which implemented the “Prospectus Directive” (Directive 2003/71/EC of the European Parliament and Council) on the prospectus to be published when securities are offered to the public or admitted to trading. Disclosures that are not applicable to Sodexho Alliance are marked “N/A”.

The information that constitutes the fi nancial report required for all listed companies in the Monetary and Financial code of the European Parliament and Council (Directive 2004/109/EC) (“Transparence Directive” ).

The main headings of the Management Report defi ned by L.225-100 of the French Commercial Code.

•

•

•



In accordance with Note 1 from CE 809/2004 policy Pages

1. Person responsible for the reference document 248

2. Statutory auditors 248

3. Selected fi nancial information 16-17

4. Risk factors 76-77; 168-169

5. General information

5.1. History 5

5.2. Investments 180

6. Overview of business 28-51

7. Organisation chart

7.1. Group description 225

7.2. Main affi liates 170-176

8. Tangible fi xed assets N/A

9. Financial position and operating profi t analysis 113-180

10.cash and capital

10.1 General information on the capital 220-224

10.2 Cash fl ow statement 116

10.3 Information on borrowing conditions and on the fi nancing 148-150

11. Research and development, patent and licenses 23-24

12. Information on trends 111-112

13. Profi t forecast or estimate N/A

14. Board of directors and senior management

14.1. Members of the Board of Directors and Senior Management 56-63; 80-81

14.2. Absence of potential confl ict of interest 64-65

15. Compensation and benefi ts 63; 81

16. Duties of the board of directors 66-69

17. Employees

17.1. Number of Employees 16-17; 181

17.2. Stock options and employees’ profi t sharing plans 180; 82-87

17.3. Employees participation in Share Capital 223-224

Reconciliation table


Reconciliation table 10.

In accordance with Note 1 from CE 809/2004 policy Pages

18. Principal shareholders 98

19. Related party transactions 65; 228-229

20. Financial information concerning assets, fi nancial position and company operating profi t

20.1. Historical fi nancial information 1

20.2. Pro forma fi nancial information N/A

20.3. Financial statements 113-176; 192-207

20.4. Financial information control 177; 208-209

20.5. Date of the last fi nancial information 1

20.6. Intermediary and other fi nancial information N/A

20.7. Dividend distribution policy 228

20.8. Litigation 167

21. Other information

21.1. General information on the share capital 220

21.2. General information on the Company 218-220

22. Material contracts 219

23. Information coming from third parties, expert declarations and interest declarations N/A

24. Information available to the public 1

25. Information relating to subsidiaries 212-213



Information concerning the Financial Report Pages

1. Individual Company Financial Statements 192-207

2. Consolidated Financial Statements 113-176

3. Management Report Table below

4. Declaration of Responsibility 248

5. Statutory Auditors’ Reports 177; 208

6. Auditors’ fees 79

Main headings of the Management Report - L.225-100 of the French Commercial Code Pages

1. Management Report 102-112

2. Employment and Environmental Information 214-216

3. Information concerning the Board of Directors and senior management 56-62; 80

4. General information on the share capital 220-223

5. Board of Directors Report to the Shareholders 228-229

This document contain s statements that may be considered as forward-looking statements and as such may not relate strictly to historical or current facts. These statements represent management’s views as of the date they are made and we assume no obligation to update them. You are cautioned not to place undue reliance on our forward looking statements.

Published by SodexoDesign, creation and production:

Coordination: Xplicite

Cover:

This document is eco-friendly. It has been designed to optimize the quantity of paper and ink used. It has been printed with plant-based inks on paper made entirely of wood from forests under sustainable development (certifi ed FSC/PEFC). The printer is certifi ed Imprim’Vert: its treats and recycles any waste from production.

This document is recyclable. Throw in the appropriate garbage after use.

New address as of April 2008

Sodexo, Head Offi ce

255, quai de la Bataille de Stalingrad

92130 Issy-Les-Moulineaux – France

Sodexo, Conference Center and Restaurant Dockside

226, quai de la Bataille de Stalingrad

92130 Issy-Les-Moulineaux – France

is changing the Group’s name and rejuvenating its visual identity.

In 2008,

Sodexo_Couv_Doc_Ref_2007-GB.indd 1 14/01/08 15:18:03